Monzo Bank Ltd · DRN-6260769

The complaint Mr N complains that Monzo Bank Ltd (‘Monzo’) did not reimburse the funds he says he lost to a scam. What happened The circumstances of the scam are well known to both parties, so I won’t set them out in detail here. Instead, I’ll summarise the key points. Mr N has said that he was deceived by scammers into making the following payments from his Monzo account towards what he thought was a legitimate cryptocurrency investment scheme. He was first contacted out of the blue through a well-known messaging app. He was promised returns of 100% or more and was soon setup with an account on a fake trading platform where he was able to view the supposed performance of his investment. As part of the scam he sent money from his Monzo account to the accounts of two other people he believed were “treasurers” of the investment business. He also made card payments from his Monzo account to his own crypto wallet where I understand his money was converted into cryptocurrency and transferred on to the scammers. Mr N has disputed the following payments from his Monzo account: Payment Date Payee Payment type Amount 1 22 March 2024 Bank account held by M Transfer £525 2 22 March 2024 Bank account held by M Transfer £200 3 22 March 2024 Bank account held by M Transfer £20 4 24 March 2024 Bank account held by M Transfer £303.80 5 24 March 2024 Bank account held by M Transfer £25 6 24 March 2024 Mr N’s own crypto wallet Card Payment £2,600 7 25 March 2024 Bank account held by M Transfer £200 8 25 March 2024 Bank account held by M Transfer £50 9 25 March 2024 Bank account held by A Transfer £5,000 10 25 March 2024 Mr N’s own crypto wallet Card Payment £500 11 25 March 2024 Bank account held by M Transfer £530 12 27 March Bank account held by A Transfer £1,150

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2024 13 27 March 2024 Bank account held by A Transfer £200 14 27 March 2024 Bank account held by A Transfer £500 15 27 March 2024 Bank account held by A Transfer £120 Total payments £11,923.80 Mr N continued to make payments to one of the recipients after 27 March 2024 but hasn’t raised those payments with Monzo and they do not form part of this complaint. I’m also aware that Mr N also made several payments towards the scam from an account held with a different bank between December 2023 and February 2024. Mr N said he realised he’d been scammed when he was told he had to pay fees to withdraw his money. Mr N has never received his money back or the profits he thought he’d made. Via a professional representative, Mr N first raised the matter with Monzo in May 2024. Mr N’s representatives said Monzo should have intervened at payment six and if it had done so it could have exposed the scam. They also suggested Monzo should consider Mr N’s circumstances and that he may be considered vulnerable. Monzo didn’t provide a response to the claim and complaint until after it was referred to this service. Monzo said it wasn’t liable because Mr N had paid into his own wallet and Monzo wasn’t the point of loss. It also said it couldn’t raise chargeback claims for the card payments because Mr N received the money into his crypto wallet and he’d received the service expected from the crypto wallet provider. Mr N remained unhappy with the outcome and one of our Investigators considered the complaint and recommended that it be upheld in part. She said Mr N did not have a reasonable basis for belief when making the payments. But she was also of the opinion that Monzo could have done more to stop the scam at the point of payment number nine. In short, the Investigator said Monzo should refund Mr N 50% of the transactions from payment number nine onwards along with interest. Mr N agreed with the outcome. Monzo did not agree, but it did offer to refund Mr N 50% of payments nine, ten and eleven, along with interest. Mr N did not accept this offer. I sent Mr N and Monzo a provisional decision on 13 March 2026, setting out why I intend to not uphold the complaint. In my provisional decision I said the following: “I’m sorry Mr N has been the victim of a scam. I don’t underestimate the impact it has had on him. But I need to decide whether Monzo can fairly and reasonably be held responsible for Mr N’s loss. And I don’t think it can, I’ll explain why. In deciding what’s fair and reasonable in all the circumstances of a complaint, I’m required to take into account relevant: law and regulations; regulators’ rules, guidance and standards; codes of practice; and, where appropriate, what I consider to have been good industry practice at the time. It isn’t in dispute that Mr N authorised the payments. Because of this the starting position – in line with the Payment Services Regulations 2017 – is that Mr N is liable for the transactions. But he says he has been the victim of an authorised push payment (APP) scam.

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There are, however, some situations where we believe that businesses, taking into account relevant rules, codes and best practice standards, shouldn’t have taken their customer’s authorisation instruction at ‘face value’ – or should have looked at the wider circumstances surrounding the transaction before making the payment. Monzo also has a duty to exercise reasonable skill and care, pay due regard to the interest of its customers and to follow good industry practice to keep customers’ accounts safe. This includes identifying vulnerable consumers who may be particularly susceptible to scams and looking out for payments which might indicate the consumer is at risk of financial harm. Taking these things into account, I need to decide whether Monzo acted fairly and reasonably in its dealings with Mr N. Monzo aren’t a signatory of the CRM Code but have agreed to apply its provisions. The CRM Code requires firms to reimburse customers who have been the victims of APP scams in all but a limited number of circumstances. Mr N’s vulnerability Mr N’s professional representatives have said that Monzo should have considered Mr N’s personal circumstances, namely his age, and that it can be a risk factor in relation to scams. Broadly speaking, if a person’s circumstances meet the CRM Code’s definition of vulnerability they should be reimbursed notwithstanding the usual exceptions to reimbursement under the CRM Code and regardless of whether the Firm knew about the vulnerability. Mr N’s professional representatives haven’t provided any substantive reasons or evidence to suggest Mr N was vulnerable. And none of the information or evidence I’ve reviewed persuades me that Mr N’s circumstances meet the CRM Code definition of vulnerability. It follows that I don’t think Monzo need to reimburse Mr N under this particular provision of the CRM Code. Is Mr N entitled to reimbursement under the CRM Code? The CRM Code does not apply to the two card payments Mr N made to his own crypto wallet. This is because the CRM Code does not apply to payments made to accounts held by the person sending the payment, nor does it apply to card payments. So, I’ve only considered whether Monzo fairly declined to reimburse Mr N under the CRM Code in relation to the faster payments Mr N made to the two individuals. Initially it appears there was a misunderstanding about these payments being peer-to-peer purchases of cryptocurrency – which wouldn’t be covered by the CRM Code. However, Mr N’s professional representative has confirmed this wasn’t the case. It’s my understanding that the faster payments were simply bank transfers to other individuals and as such would be covered by the CRM Code. Under the CRM Code, a Sending Firm (in this case Monzo) may choose not to reimburse a customer if it can establish that*: • …The customer made the payment without having a reasonable basis for believing that: • the payee was the person the Customer was expecting to pay; • the payment was for genuine goods or services; and/or • the person or business with whom they transacted was legitimate.

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• The customer ignored what the CRM Code refers to as an ‘Effective Warning’ by failing to take appropriate action in response to such an Effective Warning. *Further exceptions outlined in the CRM Code do not apply to this case. The CRM Code also says that in assessing whether a Customer should be reimbursed, the Firm should consider whether the Customer has acted dishonestly or obstructively in a material respect. When assessing whether it can establish these things, Monzo must consider whether they would have had a ‘material effect on preventing the APP scam’. Reasonable basis for belief Taking into account all of the circumstances of this case, I don’t think Mr N had a reasonable basis for believing the payments were for genuine goods or services; and/or the person or business with whom he transacted was legitimate. I consider there to have been enough warning signs that ought to have caused Mr N concern from the outset, which he does not appear to have reasonably acknowledged or acted upon. Based on the evidence I’ve reviewed it seems to me that Mr N took what he was being told by the scammers at face value and doesn’t appear to have completed much independent research aside from looking at the scammer’s website and searching online but finding no negative reviews. - Mr N wasn’t an experienced investor and wasn’t actively looking to invest, but he was contacted out of the blue on a messaging service by someone he didn’t know, offering him an opportunity to make money. Regardless of previous experience, I think being contacted like this with no prompting should have been a red flag. - Mr N was told he could make up to 100% or more in profit. I accept he wasn’t an experienced investor, but I think it’s reasonable to say that this sounded too good to be true and should have been concerning to Mr N. - Mr N was told to mislead the bank and I think being told to mislead a trusted business like a bank should also have been concerning to Mr N. - It’s not clear why Mr N had to pay two individuals when he also had his own crypto wallet which was also used to orchestrate the scam. And while I appreciate he thought, and trusted, that the two recipients were “treasurers”, I haven’t seen any evidence that explains why Mr N had to pay these people or what steps he took to verify what he was being told. - I understand that by the time of the payments in dispute here, Mr N had been sending money towards the scam for a few months already from his other bank and had likely seen his supposed profits building. While the payments from his other bank are not part of this complaint, I have considered information received from that bank. It had several calls with Mr N where he was given information and examples of common red flags of scams involving crypto-related investments that were relevant to what he was experiencing, such as: o Being contacted by messaging services o Being helped to open online accounts and wallets o A third-party having access to his crypto wallet o Anyone advising the customer or telling the customer to start investing would be a scam

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o Being promised returns that are too good to be true or being told the investment is low risk o Being told banks are against the customer making crypto related payments and the importance of being honest with the bank when answering its questions o Crypto investments not being regulated by the Financial Conduct Authority (FCA) and being advised to check the FCA register and scam check service before making any payments o Scammers showing victims supposed evidence of their returns only for it to turn out to be fake So by the time of the payments Mr N made from his Monzo account, I think he ought reasonably to have been aware that there were several red flags about the opportunity despite the profits he thought he was seeing. Taking everything into account, I’m satisfied Mr N should’ve had reasonable cause for concern that things might not be as they seem at the time he made the faster payments from his Monzo account. But it doesn’t appear that he made adequate enquiries into the legitimacy of things or what he was being told. I do acknowledge that Mr N relied on what he was being shown and told by the scammers, but all things considered, I think there were sufficient red flags here that ought to have led Mr N to have acted more cautiously than he did. So, I think Monzo can fairly rely on one of the exceptions to reimbursement – that Mr N made the payments without a reasonable basis for believing that the payments were for genuine goods or services and/or the person or business with whom he transacted with was legitimate. Did Monzo meet its standards? The CRM Code also sets out standards that firms are required to meet. Where these are not met, the firm may still be liable to reimburse a victim in part, even where it has been able to establish that an exception to full reimbursement may be fairly applied (as I am satisfied Monzo can establish here). Those requirements include the provision of what the CRM Code defines as an ‘Effective Warning’ when a firm identifies an APP scam risk in relation to a payment. In short, the CRM Code said that where the firm identifies an APP scam risk it should take reasonable steps to provide their customer with ‘Effective Warnings’. It goes on to say that as a minimum, an Effective Warning should be understandable, clear, impactful, timely and specific. Monzo only needs to provide an Effective Warning when it identifies APP scam risks during a payment journey. Based on what Monzo could reasonably have known at the time, I consider the only payment that would have particularly stood out as being at risk of being connected to a fraud or scam was payment nine. I say this because, Mr N’s account was new and there wasn’t much account history to compare the payments to. The payments he was making were broadly in line with the reasons he gave Monzo for opening his account. The payments also didn’t follow any recognised scam patterns and were sent to individuals. But payment nine is noticeably larger than the others, at £5,000, and stands out as unusual. So I think Monzo should have provided Mr N with an Effective Warning at the time of this payment – but it didn’t.

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However, the CRM Code also says “The assessment of whether a Firm has met a standard or not should involve consideration of whether compliance with that standard would have had a material effect on preventing the APP scam that took place”. I don’t consider that Monzo could reasonably have given a warning that would have likely made a difference in this instance and I don’t think this would have had a material effect on preventing the scam that took place. I say this because, Monzo did speak to Mr N about a second attempted payment of £5,000 he’d tried to make on 25 March 2024. The second attempted payment appears to have been stopped because Mr N had reached his daily transfer limit. Nevertheless, Monzo spoke to Mr N twice on 26 March 2024. Mr N was honest about trying to send money that would be used to purchase cryptocurrency and that his wallet was accessible by the person he was sending money to. But he also told Monzo that he was friends with the recipient, had known him for nine or ten years, used to work with him, regularly meets him and trusts him. Mr N also reassured Monzo that he was confident the recipient knew the market well and was experienced in trading. Monzo urged Mr N to ensure he had control of his wallet and to take time learning how the investment worked. It urged him to seek independent financial advice, check online reviews on trusted websites and check the FCA and its warning list. Monzo also told Mr N that genuine investments will never guarantee profits, scammers will have websites showing earnings, scammers will ask a person to send crypto to a new wallet and other more general scam warnings. Monzo also followed up the call in its in-app chat and included some of the red flags discussed as well as links to several articles relating to crypto investments and scams. Throughout the calls Mr N acknowledged what Monzo was telling him, but told Monzo he trusted the person he was paying and was happy with what he was doing. It’s clear Monzo did have concerns about what Mr N had told it, and I do think Monzo could have probed further. But Mr N also misled Monzo and reassured it about his relationship with the payee and his confidence in the investment and that he had done his due diligence including checking with the FCA. He doesn’t appear to have acted on the warnings and advice Monzo gave him. I’ve also considered that Mr N spoke to his other bank several times before he made the payments from his Monzo account. His other bank asked questions about why he was making payments, how he’d become involved in crypto trading and what research he’d done. Mr N gave similar answers and reassurances to his other bank. He was also given warnings about cryptocurrency scams including the risks involved, the signs to look out for and the steps he could take, all of which were relevant to what Mr N was experiencing. But he moved past those warnings and continued to make payments from that bank and then from his Monzo account. So overall, I don’t think if Monzo had provided Mr N with an Effective Warning at the point of payment nine, as I think it should have done, it would have made a material difference to the success of the scam. Should Monzo have done anything else to prevent the loss? Outside of the CRM Code, good industry practice requires that regulated firms such as Monzo engage in the monitoring of customer accounts and to be on the lookout for suspicious or out of character transactions with an aim of preventing fraud and protecting customers from financial harm.

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Interventions I’ve thought about the two card payments Mr N made to his crypto wallet when considering whether Monzo could have done anything else to prevent Mr N’s loss. But I don’t think Monzo needed to intervene on either of the card payments. I don’t think the payments were sufficiently unusual or suspicious for Monzo to have been concerned that Mr N may be falling victim to a scam or was in danger of financial harm. I accept that Mr N hadn’t made card payments to cryptocurrency providers before but one of the purposes he gave for opening the account was “cryptocurrencies”. And while the first card payment was for £2,600, I don’t think either payment were so unusual or high value that they indicated potential harm. As mentioned above, I think the only payment Mr N is disputing that would have looked suspicious or indicative of fraud was payment nine, for £5,000. I think it should have triggered Monzo’s fraud detection systems – prompting it to intervene before releasing the transaction. I am mindful of the fact that the payment occurred after the Consumer Duty came into force. It’s my view that a proportionate intervention would have been a scam warning tailored to the likely scam Mr N was at risk of. For example, a warning asking a series of automated questions designed to narrow down the type of scam risk associated with the payment transaction Mr N was making. But for the same reasons explained above, I’m persuaded Mr N would most likely have proceeded with the £5,000 payment regardless of Monzo intervening and providing a warning (such as the one described above). And I don’t think Monzo could have stopped the scam in its tracks. Recovery of funds I’ve considered whether Monzo did what it could to recover the funds Mr N lost after he reported the matter to it. Monzo has said it didn’t attempt to recover Mr N’s funds from the two accounts he’d sent faster payments to when he first reported it to Monzo. Monzo said this was because so much time had passed since the payments that it was unlikely any funds would have remained. Monzo has since confirmed that one of the accounts was also a Monzo account and it can see nothing would have been recoverable in any event. I would have expected Monzo to have taken steps to try and recover Mr N’s funds promptly after he reported the matter to it. But scammers will often move money from their account quickly. The final payment Mr N is disputing here was made on 27 March 2024 but he didn’t raise the matter with Monzo until 22 May 2024 – almost two months later. No evidence has been provided to suggest that any of Mr N’s funds remained at the point he raised his claim with Monzo. On balance, I don’t think it’s likely that any of Mr N’s funds would have been recoverable had Monzo attempted to recover them when Mr N first got in touch to report the matter. Regarding the two card payments, the only option Monzo had to recover Mr N’s funds was via a Chargeback claim. Chargeback is a voluntary scheme and banks are under no formal obligation to raise a claim and the rules are set by the card scheme. I would only expect Monzo to have raised a Chargeback if there was a reasonable prospect it would succeed. Monzo has said it didn’t have any grounds to raise a chargeback because the payments were made to Mr N’s own crypto wallet, and the wallet provider hadn’t made any errors and had provided the service advertised. On balance I don’t think it was

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unreasonable that Monzo didn’t take any further action at the time as there wouldn’t have been a reasonable prospect of the Chargeback succeeding. Summary I don’t find Monzo is to blame for Mr N’s losses. I don’t find it is liable to refund Mr N under the terms of the CRM Code or for any other reason. In saying this, I want to stress that I am very sorry to hear about what happened to Mr N and I am sorry he has lost out here. He was the victim of a cynical scam designed to defraud him of his money and provide nothing in return. But I can only look at what Monzo was required to do – I have no power to consider the actions of the criminal scammers who were ultimately responsible for Mr N’s loss. Having considered everything very carefully, in my judgment, this is a fair and reasonable outcome in the circumstances of this complaint. My provisional decision For the reasons set out above, my provisional decision is to not uphold this complaint against Monzo Bank Ltd. This is subject to any comments or further evidence either Mr N or Monzo Bank Ltd may wish to make”. I said I’d consider anything further Mr N and Monzo submitted following the provisional decision. Responses to my provisional decision Mr N is no longer professionally represented, but he has replied to my provisional decision and confirmed he would like to continue to pursue the complaint. But Mr N hasn’t provided any additional information or points for me to consider in response to my provisional decision. Monzo hasn’t provided a response by the date given. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. Neither party has provided any additional evidence, information or points in response to my provisional decision. As such, I still think the conclusion I set out in my provisional decision is correct. Once again, I am very sorry to hear that Mr N has lost out and has been the victim of a cruel scam. But for the reasons explained in my provisional decision, I don’t think it would be fair and reasonable to hold Monzo Bank Ltd liable for Mr N’s loss. It follows that Monzo Bank Ltd isn’t required to take any further action. My final decision For the reasons set out above, I do not uphold this complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr N to accept or reject my decision before 27 April 2026.

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Mike Southgate Ombudsman

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