Bank of Scotland plc trading as Halifax · DRN-6247897

The complaint Mr M complains that Bank of Scotland plc trading as Halifax (“Halifax”) have declined to reimburse funds he lost as a result of an alleged scam. What happened The background to this complaint is well known to both parties, so I won’t repeat it in detail here. But in summary, I understand it to be as follows. Mr M became aware of a business opportunity. The company offering the business opportunity will be further referred to as “Company A”. Company A offered a range of services, including online courses, access to a group of mentors, as well as a business opportunity. As part of the business opportunity, Company A claimed they’d set up and administer a social media page for the purchaser. Profits would be generated by people buying courses through links on the social media page that had been created. For ease of reading, this business opportunity will be referred to as “Package A”. Having reviewed the information and satisfied with what he’d seen, Mr M made payments, totalling £58,800, from his Halifax account between January and September 2024 towards Package A with Company A. When Mr M was unable to contact the company, he feared he’d been the victim of a scam and contacted Halifax to request reimbursement of his payments. Halifax investigated the matter but sought to delay giving an outcome on Mr M’s complaint as there was an ongoing investigation into the matter. Halifax went on to advise Mr M that they’d update him as soon as any updates were available. Unhappy with this response, Mr M referred his complaint to our service. An investigator looked into Mr M’s complaint but didn’t uphold it. They said there were too many unknowns for them to draw a conclusion on whether Mr M had fallen victim to a scam and that Halifax had acted fairly in delaying making a reimbursement decision on his complaint. Mr M disagreed with the investigator’s assessment as he felt there is currently enough information to determine that he’d been the victim of a scam and should be refunded on that basis. As the complaint couldn’t be resolved by the investigator it was passed to me for a decision. What I provisionally decided – and why In my provisional decision I said: I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint.

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Mr M has provided detailed submissions to our service in relation to this complaint. In keeping with our role as an informal dispute resolution service, I will focus here on the points I find to be material to the outcome of Mr M’s complaint. This is not meant to be a discourtesy to Mr M and I want to assure him I have considered everything he has submitted carefully. 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 be good industry practice at the time. In broad terms, the starting position at law is that Halifax is expected to process payments and withdrawals that a customer authorises it to make, in accordance with the Payment Services Regulations (in this case the 2017 regulations) and the terms and conditions of the customer’s account. Here it’s not in dispute that the payments were authorised, so the starting position is that Halifax isn’t liable for the transactions. Should Mr M be reimbursed under the Contingent Reimbursement Model Code? At the time Mr M made the payments, Halifax were a signatory of the Lending Standards Board’s Contingent Reimbursement Model (CRM) Code which requires firms to reimburse customers who have been the victims of authorised push payment (APP) scams in all but a limited number of circumstances. The CRM Code can only apply where the transactions met the definition of an APP scam. The relevant part of the CRM Code definition of an APP scam requires that the payment was made to: “another person for what they believed were legitimate purposes but which were in fact fraudulent.” Following its commencement, the CRM Code was revised by the Lending Standards Board to allow a firm to delay its decision if there is an ongoing statutory investigation taking place, which may inform the firm’s decision. R3(1)(c) in the Code sets out that ‘If a case is subject to investigation by a statutory body and the outcome might reasonably inform the Firm’s decision, the Firm may wait for the outcome of the investigation before making a decision.’ Though Halifax didn’t specifically refer to R3(1)(c) of the CRM Code in their response to Mr M, I believe that the reason for not giving an answer on the claim echoes the sentiment of the clause. I’ll therefore consider whether it was fair and reasonable for Halifax to rely on R3(1)(c) in the CRM Code as a reason to delay reaching a reimbursement decision on Mr M’s claim. In reaching my findings on this complaint I’ve thought about whether there is currently enough evidence to decide that the payments Mr M made were the result of an APP scam; bearing in mind the definition of an APP scam set out in the CRM Code. In doing so I’ve thought carefully about the evidence available at the time Halifax received the scam claim, and indeed whether the evidence available shows it’s more likely than not that Mr M was scammed.

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As I have explained, the relevant part of the CRM Code’s definition of an APP scam requires that the payment was made to: “another person for what they believed were legitimate purposes, but which were in fact fraudulent.” So first of all, the definition requires that Mr M believed the purpose of the payment was legitimate. Then I need to consider the purposes the beneficiary had in mind at the time the payments were made, and whether these were fraudulent. I’m satisfied Mr M believed the payments were for a legitimate purpose. This is because at the time he made the payments, Company A’s website contained courses available to clients along with endorsements from businesses and students. So I can see why Mr M considered the opportunity to be legitimate. But for the definition to apply, I’d also need to be persuaded that the purpose Company A had for the payments was fraudulent. In order to reach those conclusions, I’d need to be satisfied that the purposes were significantly different from the purposes Mr M believed the payments to be for and that this was the result of dishonest deception by Company A. I’d also need to be persuaded, in order to conclude Mr M has been scammed and that this isn’t a private civil dispute, that the money was obtained by dishonest deception such that it was criminally obtained, on the balance of probabilities. Having considered all the evidence very carefully, I think it was fair and reasonable for Halifax to rely on R3(1)(c) of the CRM Code and delay making a reimbursement decision, for broadly the same reasons as the investigator. Ultimately this is because the available evidence is finely balanced and not always clear or conclusive, so I don’t think I can fairly determine how or why Mr M’s money was lost. I am not persuaded, one way or the other, as to whether it was lost due to a scam or because of a failed business. Mr M has highlighted some key pieces of evidence to support the assertions that he has been scammed. I’ve also reviewed publicly available information about Company A as well as information retrieved from banks which held accounts for Company A. Below, I have set out my reasons as to why the evidence doesn’t persuade me, it’s more likely than not Mr M has been scammed. Video confessions of Company A’s director In a publicly available video, Company A’s director (further referred to as “F”) states that monthly sales figures for their courses had been “edited” and that actual sales were “a few a day,” with the last “significant” sales having occurred in 2022 or 2023. F also appears to suggest that the business opportunity package (the same Mr M was purchasing) was in fact a Ponzi scheme. While on the surface this may appear to be an admission of wrongdoing by F, the questioning appears to have been carried out by members of his sales team, who may have had an interest in assigning blame elsewhere. I say this because it’s clear the video was recorded in an informal setting and those questioning him seem to know him well given the colloquial language used. I’m mindful that in November 2024, an online news outlet quoted F as saying that he’d been “threatened and pressured” to make certain statements. He also acknowledged his own shortcomings as well as those within his team which led to the business’s breakdown, and expressed a commitment to work with investors to return funds, and indicated he was pursuing legal action alongside a police report.

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Of course, I can understand the concern regarding what F is recorded as saying. On face value the recording appears to be a clear admission of not using his investors’ money for the intended purposes. But I’m mindful that given those making the recording appear to be members of the sales team, they could very well have a vested interest in ensuring someone takes the blame for anything that went wrong. Having reviewed the recording in which F appears alone and apologises, there isn’t an admission of fraud or fraudulent behaviour being carried out by himself or Company A. Instead, he apologises for his mistakes and asks for forgiveness. Without knowing what mistakes are referenced by F, I’m unable to say that he is confessing to carrying out any fraudulent activity. Overall I’m not persuaded the recorded videos are reliable or persuasive evidence that the business opportunity Mr M purchased was a Ponzi scheme given the nature of the recordings, F’s claim of coercion, and the possibility that his comments were made under duress. I haven’t disregarded the content of the videos in reaching the conclusions that I have, but I do take the accuracy of what was said with caution. Furthermore, while it’s unclear what ‘significant challenges’ F references, this does give rise to the possibility of poor business practices resulting in the failure of the business. Company A’s account activity and payments to Company A I have also reviewed bank accounts controlled by Company A. While I can’t share the full details of what I’ve seen, I can see significant revenue, which appears to be comprised of credits from various individuals and businesses with no clear link to Package A. Such credits could relate to sales of online courses or to other legitimate operations, but they may also reflect purchases of Package A. I can also see that a large number of payments were made to and received from outside the UK, from countries it was claimed Company A operated in. Without knowing the exact purpose behind each payment, it wouldn’t be fair to conclude this revenue to be ill-gotten gains. The payments could speak to the legitimacy of the scheme but on the other hand they may not. It is worth explaining that we have limited powers to make enquiries about these payments and external organisations, such as the police, are much better placed to undertake such enquiries. Mr M claims that certain payments were made to an account in the name of a dissolved business, and others to F personally. Given F’s claim that he was self-employed, such use of a personal account would not necessarily be considered suspicious and it’s possible the use of the dissolved business account may represent an administrative error. Though this evidence could indicate suspicious and untoward activities by Company A, it could also simply be the result of poor administration and substandard company practices. A key feature of Package A was that Company A would create and manage a social media page through which customers would purchase access to Company A’s courses. Purchasers of Package A were told that their funds would be used to pay for social media marketing, and I can see that there are significant payments to a specific social media platform across the accounts associated with Company A. I can also see that Company A did advertise online, which supports the argument that marketing activity occurred. However, there is a discrepancy between the total sum of money paid to the social media platform and the funds Company A received from purchasers of Package A. It’s also a concern to see that many such purchasers have reported not receiving the social media pages that were promised.

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Given the discrepancy mentioned above, I’ve considered the possible explanations as to why this occurred. It's possible the difference in funds received from purchasers and funds paid to social media platforms resulted from Company A’s operational shortcomings. It could also be as a result of failings on the social media platform’s part. It also remains possible that there was a deliberate non-performance of the contracted activity by Company A with the view to defrauding its customers. There are a number of possible and plausible explanations regarding the failure of Company A to carry out its contractual obligations. The evidence currently available doesn’t persuade me, either way, that the failure to carry out its operations were innocent failings on Company A’s part or whether these were deliberate actions with the intention of defrauding its customers. Further to this, it’s possible that investigations by other parties may have uncovered accounts that myself, and this service, is not aware of. So, it remains that there could be vast sums being paid to the social media platform in line with the activity we’d expect to see of Company A. Conversely, it could be the case that the other potential accounts could show no other payments being made to the social media site. Without knowing that we’ve reviewed all of the accounts linked to Company A, I can’t be satisfied that the discrepancy already identified in sums received for Package A and sums paid to social media platforms is a true reflection of Company A’s operations. I’m conscious that such confirmation may only come at the conclusion of any investigation by law enforcement. While not critical to the overall outcome here, this further demonstrates the difficulty our service has in drawing a conclusion as to whether the account activity we’ve reviewed indicates that fraudulent actions have taken place. Mr M has cited that the communication sent by Company A to investors in 2024, explaining its temporary change in payment method, as evidence that it was a fraudulent company. But, for similar reasons already mentioned above, I don’t believe this is clear evidence that Company A were, or weren’t, using funds in the agreed manner. Could Halifax have attempted a chargeback for Mr M at the time they were aware of his complaint? And would this have been successful? Three of the payments made by Mr M to Company A were made using his debit card. This means that the payments are covered by a scheme, known as ‘chargeback’. Importantly, this scheme offers a route of resolution in disputes between consumers and the merchant to whom the payment has been made. A chargeback isn’t a legal right for consumers, but is instead a voluntary process offered by each scheme. In order for me to find in favour of Mr M I’ll need to be satisfied that, on the balance of probabilities, his chargeback claim stood a reasonable chance of success. Furthermore, any chargeback claims are required to be made within certain timeframes. Mr M first raised the disputed transactions with Halifax on 16 January 2025. In this case, this would mean that the dispute was raised within 120 days of the last debit card payment made by Mr M (5 August 2024) but also within 540 days of the first two debit card payments made (7 January 2024 & 8 January 2024). So, when Mr M approached Halifax in January 2025, it would have had the opportunity to process chargebacks for these disputed transactions. I therefore believe that Halifax should have pursued the chargeback process for the three payments referenced above. It is now too late for Halifax to do so – but if it had done so it

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seems more likely than not, in all the circumstances and on balance of probabilities, that Mr M would have received a refund of those payments. I say this as it’s clear that Company A did not fulfil its contract with Mr M as it hasn’t made the monthly payments promised or delivered the other services it set out that it would provide. As that’s the case, I believe Halifax ought to reimburse the loss Mr M has incurred as a result of these card payments. Returns from Company A In total, Mr M made payments totalling £69,800 to Company A, and received returns totalling £35,865. These payments were made and received from Halifax and another account Mr M has with another bank. So, when considering any reimbursement Halifax should pay to Mr M, I’ve considered the returns already received. Based on the above figures, this would mean that Mr M has received payments which represent a total of 51.38% of the payments he made to Company A. So, I think it would be fair and reasonable for Halifax to refund the debit card payments Mr M made from his account with them (£16,800), less a proportionate deduction for the returns he received. So, in the circumstances, I think a fair settlement would amount to £8,168.16 (which is 48.62% of the card payments which should be refunded). Should Halifax have intervened when Mr M made the payments? If so, would this have made a difference? Mr M has argued that Halifax ought to have discussed the payments with him prior to allowing them to debit his account. As referenced earlier in my decision, Halifax 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 customer’s accounts safe. That said, businesses have no obligation to protect its customers from bad bargains or poor investment choices. As I’m not persuaded, one way or the other, that Company A was a fraudulent business, I don’t think it would be fair to ask Halifax to reimburse Mr M on the basis that they failed in their obligations by not intervening and discussing the payments prior to them debiting his account. Overall For the reasons I’ve explained, I agree that there are some concerning features regarding Company A and its operation but there are simply too many unknowns for me to be able to draw conclusions even on a balance of probabilities. Ultimately, I believe there to be insufficient evidence available for me to make a finding, on the balance of probabilities, as to Company A’s intent and whether they set out to defraud purchasers of Package A. As it stands, I don’t believe that Halifax acted unfairly in relying on R3(1)(c) and delaying making a reimbursement decision until more information comes to light as a result of the police investigation. It follows that I don’t think Halifax should reimburse Mr M under the CRM Code.

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Should any material new evidence come to light at a later date that would suggest that Mr M was the victim of a scam, such as from the ongoing police investigation, then I would suggest he contacts Halifax to make them aware of this new evidence. Though I don’t believe Mr M should be reimbursed under the CRM Code, I’m persuaded that any chargeback claim presented would’ve been successful. As that’s the case, I believe Halifax should reimburse a proportion of those payments. Putting things right To put things right Halifax should: • Refund 48.62% of the debit card payments made to Company A. I calculate this sum to be £8,168.16. • Pay interest on the refund of 8% simple interest, calculated from the date the chargeback claim ought to have been raised until the date of settlement. My provisional decision My provisional decision was that I intended to uphold this complaint, in part, against Bank of Scotland plc trading as Halifax. Responses to my provisional decision Mr M responded to say that he accepted my provisional decision and had nothing further to add. Under the Dispute Resolution Rules (found in the Financial Conduct Authority’s Handbook), DISP 3.5.14 says if a respondent (Halifax) fails to comply with a time limit, the ombudsman may proceed with the consideration of the complaint. As I’ve received a response from Mr M, and the deadline for Halifax to respond to my provisional decision has expired, I’m going to proceed with issuing my final decision. 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. As I’ve received no additional arguments or evidence following my provisional decision, I see no reason to reach a different outcome in my final decision. Because of that, I’m satisfied that Halifax ought to reimburse Mr M in the way I explained, and for the reasons explained, in my provisional decision. Putting things right To put things right Halifax should: • Refund 48.62% of the debit card payments made to Company A. I calculate this sum to be £8,168.16. • Pay interest on the refund of 8% simple interest, calculated from the date the chargeback claim ought to have been raised until the date of settlement.

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If Halifax considers that it’s required by HM Revenue & Customs to deduct income tax from that interest, it should tell Mr M how much it’s taken off. It should also give Mr M a tax deduction certificate if he asks for one, so he can reclaim the tax from HM Revenue & Customs if appropriate. My final decision My final decision is that I uphold this complaint, in part, against Bank of Scotland plc trading as Halifax. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr M to accept or reject my decision before 21 April 2026. Billy Wyatt Ombudsman

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