Monzo has been found to have wrongly denied refunds to thousands of fraud and scam victims, raising fresh concerns about how digital banks handle customer complaints and financial crime protections. Data from the Financial Ombudsman Service (FOS) shows the online-only bank incorrectly rejected more than 1,000 fraud and scam complaints that were closed last year, highlighting systemic issues in reimbursement decisions.
Fraud and scam complaints typically include authorised push payment (APP) scams, chip-and-pin fraud, and identity theft cases, where victims lose money through deception or unauthorised transactions. In 2024, Monzo was judged to have made the wrong decision in 34% of the 3,372 fraud-related cases escalated to the ombudsman, the highest rate among major UK banks receiving large volumes of complaints.
Monzo Tops List for Wrongly Rejected Fraud Complaints
Among British banks, NatWest ranked second, with 33% of 1,972 fraud complaints wrongly rejected, while HSBC followed with 32% of 2,535 cases overturned by the ombudsman. The data underscores widespread challenges across the banking sector in assessing fraud claims, although Monzo’s reversal rate was the highest among its peers.
There is typically a delay between fraud incidents, customer complaints, and the ombudsman’s final rulings, meaning some of the cases reviewed last year related to fraud that occurred more than two years earlier. A Monzo spokesperson said the bank has since invested heavily in technology to prevent fraud before customers are affected, adding that Monzo prevented 2.9 times the value of fraud in 2025 compared with the previous year.
Fraud Becomes Most Common Crime in the UK
Fraud has overtaken all other crimes in the UK, accounting for an estimated 41% of offences in England and Wales in the year ending September 2024. Consumer advocates warn that victims often suffer psychological and financial harm, which can be compounded when banks initially reject reimbursement claims.
Alex Neill, co-founder and co-chief executive of consumer rights organisation Consumer Voice, said scam victims often feel ashamed and distressed when forced to fight for refunds. She called on financial institutions to make reimbursement fair, fast, and consistent, without subjecting customers to prolonged disputes.
New Rules on Scam Reimbursements
In 2024, the UK government introduced new rules requiring banks to refund most victims of authorised push payment scams, reflecting growing concern over the scale of financial crime. Industry body UK Finance reported 185,733 APP scam cases in 2024, down 20% from a peak of 232,427 in 2023. Fraudsters stole £450.7m from victims that year, with £267.1m paid out in compensation.
The FOS said it receives hundreds of fraud and scam complaints each week, highlighting the scale of the issue and the strain on dispute-resolution systems.
Monzo’s Growth and Regulatory Challenges
Founded in 2015, Monzo emerged as part of a wave of challenger banks, alongside rivals such as Revolut and Starling, that sought to disrupt traditional banking with app-based services. The company was valued at £4.5bn in October 2024 during a share sale by employees and has focused heavily on the UK market since securing a banking licence in 2016.
However, Monzo has faced regulatory scrutiny. In 2024, the bank was fined £21m by the UK financial regulator over weaknesses in financial crime controls, including allowing customers to register accounts with implausible addresses such as 10 Downing Street and Buckingham Palace.
Later that year, Monzo announced that its long-serving chief executive, TS Anil, would step down in February, to be replaced by former Google executive Diana Layfield. Under Anil’s leadership, Monzo tripled its customer base to more than 14 million and reported a record £60.5m pre-tax profit on £1.2bn in revenue.
Industry Responses and Consumer Guidance
The Financial Ombudsman Service advised victims to first raise complaints with their bank before escalating to its independent service if they feel they were treated unfairly. NatWest said it proactively contacted customers in historic cases and worked closely with the ombudsman to ensure fair outcomes. HSBC said it fully complies with reimbursement rules and refunded more than 13,000 scam claims last year, while preventing over £130m in fraud losses.
Experts say transparency, consistent decision-making, and stronger fraud prevention systems are essential as digital banking continues to expand and fraudsters evolve their tactics.