Annual Financial Awareness Campaign
18-24 March 2024

Tom loses €60,000 to fraudulent investment company

In 2017, Tom fell victim to a UK-based scam, in which he invested €60,000 with a fraudulent UK company by way of wire transfers and payments from his credit card. Tom subsequently realised that his €60,000 had been stolen by the company. Tom contacted his bank in Ireland and requested that all the payments he made to the company in the UK, be recalled.

Tom maintained that the banking community in the UK and EU were aware of the status of the company, and under Prudential Regulation Authority rules, his bank was liable for any breach of contract by the UK company. Tom maintained that as the company did not offer him a service, it had breached its contract with him and therefore Tom’s bank was liable for the breach of contract. Tom quoted the Visa Core Rules and in particular the rule that provides that before allowing a company to accept payments by debit card or credit card, there must be a physical inspection by the bank, of the listed premises of the business. Tom also quoted the SWIFT payment rules which require a similar inspection. Tom stated that had an inspection of the premises taken place, it would have been clear the premises was empty.

Tom’s bank refused to issue the requested chargebacks for €60,000, so Tom made a complaint to the FSPO.

The bank submitted that Tom had provided all of his information to the fraudulent company and had authorized the transactions. The bank also clarified that although it was Tom’s card issuer, it was not the UK company’s bank. Accordingly, it said that all it could do, was to advise a customer to contact the relevant authorities or regulators, if there were doubts about a merchant’s legal standing or regulatory status.

The Ombudsman considered the terms and conditions applicable to Tom’s account, together with the Visa Core Rules and Visa Product and Service Rules identified by Tom. The Ombudsman noted that the company that Tom had transferred his €60,000 to, was registered in the UK. The Ombudsman noted that Tom sought to rely on the rules and bylaws of the Prudential Regulation Authority at the Bank of England and the rules and bylaws of the Financial Conduct Authority in the UK. However, the Ombudsman outlined that whilst these rules and bylaws may be applicable to the operations of the company, given that it was based in the UK, they are not applicable to Tom’s Irish bank.

Regarding the Visa Core Rules, the Ombudsman outlined that these did not form part of the terms and conditions of Tom’s account, but that they are relevant. Despite this, the Ombudsman also noted that Tom had fallen outside the relevant time limits for seeking a chargeback under the Visa Core Rules. Equally, in respect of the rule Tom referred to, which required an inspection of a merchant’s premises before providing card payment facilities, the Ombudsman noted that this rule did not apply to Tom’s bank, but it applied instead to the UK company’s bank.

The Ombudsman noted that Tom had not identified any term or condition which his bank had breached. The Ombudsman also pointed to the fact that the bank confirmed that Tom did not claim a chargeback with the bank, within the required 8-week period outlined in the terms and conditions of Tom’s account.

In respect of Tom’s claim that the bank should have vetted the scam company and warned Tom not to proceed with the transactions, the Ombudsman concluded that it would be unreasonable and impractical to impose such a duty on a bank to carry out the vetting suggested by Tom. The Ombudsman did not uphold Tom’s complaint.