Nationwide Building Society · DRN-6205229

Complaint Mr C is unhappy that Nationwide Building Society didn’t reimburse him in full after he reported falling victim to a scam. Background The background to this case is well known to the parties, so I don’t intend to repeat it in full here. Instead, I’ve set out a summary of what I consider to be the most relevant facts. In late 2024, Mr C was the unfortunate victim of an investment recovery scam. He had previously fallen victim to a conventional cryptocurrency investment scam in which he lost £30,500. He was then contacted by someone who said they could assist him with recovering the money he’d lost. He found the person who’d contacted him to be credible and they seemed knowledgeable, so he went ahead with the proposal and followed this caller’s instructions. He used his Nationwide account to make the following payments: 1 10 Oct 2024 to 1 Nov 2024 14 separate payments to Company A and Company B totalling around £16,000 2 5 Nov 2024 £4,900 to Company C 3 5 Nov 2024 £5,000 to Company B 4 6 Nov 2024 £5,000 to Company C 5 9 Nov 2024 £1,700 to Company C All these payments were made to accounts with other firms held in his own name. However, subsequent steps were taken to move his funds from those accounts onwards into the control of the fraudsters. The majority were to his account with Company A, a well- established payment services provider. He also made payments to accounts with Company B and Company C. Company C was a payee that is explicitly connected to a well-known cryptocurrency exchange. Once he realised that he’d fallen victim to a scam, he notified Nationwide. It agreed to refund all of the payments that had been made to Company C. Company C is a cryptocurrency exchange and so, in Nationwide’s view, it ought to have been more mindful of the associated fraud risk and queried those payments with him. It also agreed to pay 8% simple interest per annum on those payments. Mr C wasn’t happy with that response and so he referred his complaint to this service. It was looked at by an Investigator who upheld the complaint in part. She thought that Nationwide couldn’t realistically have prevented Mr C’s losses to the 14 payments he made to Company A and B. She agreed Nationwide ought to have been more mindful of the fraud risk associated with the payments to Company C. However, she noted that amongst those payments there was a payment to Company B. She concluded that, having been alerted to the risk of a cryptocurrency scam when the first payment to Company C was being made, it should also have considered the strong likelihood that Mr C’s payment to Company B on 5 November 2024 was wrapped up in the same scam.

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Nationwide agreed with the Investigator’s opinion and offered to settle the complaint on the basis that she recommended. That would mean Mr C would reimbursed 100% of payments 2, 4 and 5 and 50% of payment 3. He would also be paid 8% simple interest on all of those payments. Mr C didn’t accept that offer and so the complaint has been passed to me to consider and come to a final decision. Findings I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. As a starting point, the legal position is that a firm is generally required to process payments and withdrawals authorised by its customer, in line with the Payment Services Regulations (in this case, the 2017 regulations) and the account terms and conditions. It is accepted that the disputed payments were authorised, so Mr C is presumed liable at first instance. Nationwide was signed up to the Lending Standard’s Boards Contingent Reimbursement Model Code (CRM Code) at the time. Under certain circumstances, the CRM Code required firms to reimburse customers who had fallen victim to APP scams. However, these payments aren’t covered by the CRM Code. It requires that payments be made to “another person” – but in this instance, Mr C was paying accounts in his own name. However, that is not the end of the story. Good industry practice required Nationwide to monitor account activity or transactions that appear unusual or out of character and could indicate a risk of fraud. Where such concerns arise, I would expect the firm to take steps to protect its customer. This could involve issuing a clear warning during the payment process or contacting the customer to understand the circumstances behind the transaction. With hindsight, we know Mr C was the victim of fraud. The questions I must consider are: (a) whether the risk should have been apparent to Nationwide at the time, given the information available; and (b) whether any error on its part was the cause of his losses. In coming to a finding on (b), I have to take into account the relevant legal principles which require me to consider whether the loss would have occurred “but for” Nationwide’s failings. In other words, I need to be satisfied that it is more likely than not that, had Nationwide acted as it should have, Mr C would not have suffered the loss he is now complaining about. If the loss would have occurred in any event then Nationwide’s failings cannot be said to be the “but for” cause of that loss. As I’ve set out in the table above, the disputed payments can be considered in two parts. The first is a period between 10 October 2024 and 1 November 2024. The second is the period following the first payment to Company C on 5 November 2024. During that first period, I think there were several payments which Nationwide shouldn’t have processed without first making enquiries with Mr C to satisfy itself that he wasn’t at risk of financial harm due to fraud. However, as I explained above, it’s not enough for me to identify a shortcoming on the firm’s part. I need to be persuaded that its failing was the cause of Mr C’s loss. I’m not convinced I can come to that conclusion. I’ve seen the messages he exchanged with the fraudster. These give the impression that Mr C would’ve relied very heavily on the guidance of the fraudster if Nationwide had queried any of the payments. The fraudster told him to not reveal to anyone who asked that he was making the payment for investment purposes or for anything to do with cryptocurrency. So even if Nationwide had questioned any of the payments during this period, I think it’s more likely that it wouldn’t have been able to uncover the genuine circumstances in which the payments were being made. It couldn’t,

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therefore, be said to have failed to warn him and it’s more likely than not that Mr C would’ve made the payments anyway. The first payment in the second period (payment 2 in the table) was a payment of £4,900 to Mr C’s account with Company C. Company C is a well-known cryptocurrency exchange. Nationwide ought to have identified the risk associated with that payment and queried it with him. Despite the fraudster’s insistence that he shouldn’t reveal that he was spending the money on cryptocurrency, it wouldn’t have been plausible for him to have concocted an alternative explanation for making the payment. Nationwide knew who the payee was and so would’ve known that the payment was cryptocurrency related. Significantly, when Mr C attempted to make payment 5, he did attempt to fabricate an explanation for the payment. But the call handler at Nationwide didn’t take it at face value, questioned it further and, ultimately, exposed the scam. I think it’s more likely than not that this would’ve happened if it had queried his first payment to Company C. Since I’ve found it could’ve prevented the scam at payment 2, it follows that, had it done so, it would also have prevented Mr C from making payments 3, 4 and 5. Any calculation of redress should therefore include all of those payments. Other issues I’ve also considered whether it would be fair and reasonable for Mr C to bear partial responsibility for his own losses by way of contributory negligence. Having done so, I’m satisfied it would be fair and reasonable for a deduction to be made to the redress payable here. I recognise he did what he did in the sincere belief that it was a valid way of recovering the money he’d lost to the earlier scam, however, I’m not persuaded that belief was a reasonable one. The explanation he was given as to how this individual could gain access to the money he’d lost in the previous scam wasn’t particularly credible, but Mr C appears to have taken the explanation at face value. Given the inherent implausibility of what he was being told and the amount of money that was at stake, I’m surprised he didn’t conduct any research independently to verify what he was being told. In addition to that, the fact that he was told that he ought to mislead Nationwide if it questioned any of the payments ought to have alerted him to the possibility that he might not be dealing with a legitimate firm. Overall, I’m satisfied that it would be fair and reasonable for a deduction of 50% to be applied to the redress here. Nationwide has already refunded 100% of all payments made to Company C and agreed in response to the Investigator’s view to (a) refund 50% of Payment 3 and (b) add interest to payments 2 to 5. Its offer of settlement is, therefore, more generous than the one I’d recommend and so I find it to be a fair and reasonable offer in all the circumstances. Final decision For the reasons I’ve explained above, I find Nationwide Building Society’s offer of settlement to be fair and reasonable. If Mr C accepts my final decision, Nationwide Building Society needs to: - Refund 50% of Payment 3 - Add 8% simple interest per annum to payments 2, 3, 4 and 5 to run from the date they debited his account until the date any settlement is paid. Under the rules of the Financial Ombudsman Service, I’m required to ask X to accept or reject my decision before 17 April 2026. James Kimmitt

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Ombudsman

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