Monzo Tops the Charts for Refusing Refunds to Scam Victims

Monzo — one of the UK’s leading digital-only banks — has come under scrutiny after data showed it topped the charts for wrongly rejecting refund claims from customers targeted by fraud and scams. According to figures reported by the Financial Ombudsman Service (FOS) and analysed in recent media coverage, the Challenger bank had the highest proportion of fraud-related complaints overturned in its favour last year — a troubling signal for consumer protection in the digital banking sector.

The data reveal that Monzo wrongly rejected about 34% of the 3,372 fraud and scam complaints referred to the FOS in the latest reporting period. This amounted to more than 1,000 cases where the Ombudsman found in favour of the customer after the bank initially declined a refund. That was the highest proportion among UK banks, placing Monzo above major incumbents such as NatWest (33%) and HSBC (32%) — both of which also saw substantial complaint volumes but slightly lower overturn rates.

These complaints include cases stemming from authorised push payment (APP) fraud, chip-and-pin fraud, and identity theft, all of which involve customers being tricked or manipulated into authorising transfers to accounts controlled by fraudsters — often with devastating financial consequences.

Why This Matters: Consumer Protection in the Digital Age

APP fraud — where someone is deceived into sending money to a criminal — has grown sharply in recent years, prompting regulatory action. In the UK, new mandatory rules introduced in 2024 require banks and payment providers to reimburse most APP fraud victims unless the customer acted recklessly or failed to take reasonable precautions.

Despite this framework, the FOS referrals reflect only those cases escalated beyond the bank’s internal complaints process. Many cases never reach the Ombudsman, meaning that rejection rates can signal broader systemic issues rather than isolated incidents.

Victims of scams — be it through impersonation calls, fake investment schemes or bogus online marketplaces — often face emotional as well as financial harm. Consumer advocates argue that banks should aim for fair, fast and transparent reimbursement processes rather than forcing victims into lengthy dispute procedures. One critic noted that scam victims “aren’t just out of pocket — they are often left feeling worried and ashamed,” underscoring the importance of swift restitution.

Monzo’s Response and Ongoing Improvements

In response to criticism, a Monzo spokesperson pointed out that some of the cases referred to the Ombudsman relate to older transactions, with fraud having occurred more than two years before referral. They also highlighted the bank’s investments in fraud prevention technology, noting that in 2025 they stopped 2.9 times the value of fraud compared to the previous year — a sign that prevention efforts may be improving.

Even so, the high overturn rate means that many customers initially denied refunds ultimately received support only after Ombudsman intervention, suggesting that Monzo’s internal fraud decisioning practices might need further refinement.

Industry observers emphasise that clear customer communications and robust fraud coverage are critical for consumer trust, especially as digital banks continue to expand. Customers should be proactive in reporting suspicious transactions promptly — within days of occurrence — and should be aware that they have the right to escalate complaints to independent bodies like the FOS if initial responses are unsatisfactory.

How the Refund Rules Work

Under UK law, victims of APP fraud are generally entitled to reimbursement up to £85,000 per scam, provided they can show they took reasonable care and were not grossly negligent. The mandatory reimbursement regime aims to give customers stronger protections than the previous voluntary code, which had resulted in inconsistent outcomes across banks.

If a bank refuses to refund, customers are encouraged to:

1. Contact the bank’s fraud team immediately using the in-app support or provided contact numbers.
2. Submit any evidence of the scam or communications with fraudsters.
3. If unresolved, file a formal complaint with the bank.
4. Escalate to the Financial Ombudsman Service if the bank response remains unsatisfactory.

#FinancialOmbudsman#FraudRefunds#ScamVictimsbankingConsumerRightsfintechMonzoUKFinance