Monzo Under Scrutiny for Wrongly Denying Thousands of Fraud Refunds in the UK

Monzo Faces Criticism Over Denied Fraud Refunds

Monzo, the digital-only bank, has been revealed to have wrongly denied refunds to thousands of customers who fell victim to fraud and scams in the United Kingdom. Data from the Financial Ombudsman Service (FOS) indicates that Monzo wrongly rejected over 1,000 fraud and scam complaints that were closed last year alone. The FOS found Monzo made the wrong decision in 34% of 3,372 cases referred to it, marking the highest rate among British banks receiving the most complaints.

Disparity in Reimbursement Rates Highlighted by Regulators

The Payments System Regulator (PSR) has previously highlighted significant disparities in how UK banks handle fraud claims. In 2022, Monzo fully refunded only 6% of customer fraud claims, a stark contrast to TSB, which reimbursed 94%. For Authorised Push Payment (APP) fraud, where victims are tricked into transferring money, Monzo refunded just 22% of customers' losses in 2022 and refused assistance in 76% of cases. More recent figures for 2023 show Monzo fully reimbursed only 9% of APP fraud cases, placing it third lowest among UK banks. By comparison, Starling reimbursed 72% and Nationwide topped the list with 96%.

Other major banks also showed lower rates of wrongful rejections compared to Monzo in the latest FOS data. NatWest was found to have wrongly rejected 33% of 1,972 fraud complaints, while HSBC wrongly rejected 32% of 2,535 complaints.

Impact on Victims and Regulatory Changes

Fraud has become the most prevalent crime in the UK, accounting for an estimated 41% of all offenses in England and Wales in the year ending September 2024. Victims of scams, which can include APP fraud, chip and PIN fraud, and identity theft, often experience significant emotional distress, feeling 'worried and ashamed' in addition to financial loss.

In 2024, new government rules were introduced, obliging banks to refund most victims of APP fraud, though exceptions can be made in cases of gross negligence. The FOS continues to receive hundreds of fraud and scam cases weekly, providing an independent avenue for customers dissatisfied with their bank's resolution.

Monzo's Response and Ongoing Efforts

A spokesperson for Monzo acknowledged that some of the cases reviewed by the FOS related to fraud that occurred more than two years ago. They stated that the bank has 'continued to invest in technology to stop fraud before it impacts our customers' and claimed to have prevented 2.9 times the value of fraud in 2025 compared to the previous year. Customers who are unhappy with Monzo's final decision regarding a fraud claim retain the right to escalate their complaint to the Financial Ombudsman Service.