Duped out of nearly £50,000 in a cryptocurrency scam, our client ‘Marcus’ was able to claim half of his money back with the help of our banking fraud team.
Marcus was tricked into parting with his money by someone he considered a close friend. He made two separate transfers of £24,000 via his banking app as an investment into a cryptocurrency, Bizzcoin.
Four years later, he’d had no dividends on his investment – and his money had gone.
Marcus, a property investor, was told about the company selling the cryptocurrency by a friend. This was a friend that he trusted, and one who said he had been able to withdraw profits from his Bizzcoin investment on a number of occasions. In fact, he claimed to have invested £50,000 and was receiving an income of more than £500 each week.
Marcus was told that he’d at least double his money if he bought into the business. He was, however, inexperienced in this type of investment and the risks involved in parting with such large sums of money. He was led to believe that the money he invested would be used to buy the cryptocurrency that – he was guaranteed – would prove to be a lucrative supplement to his income.
The business – run by two brothers – was based in the West Midlands, hundreds of miles from his home in Lancashire. Their agent ran a travel agency in West Yorkshire, and it was he who explained the scheme to Marcus.
He was told that the currency would increase in value all the time, and that he stood to at least triple his investment. Marcus was advised not to withdraw any of his invested money at an early stage to benefit from larger profits at a later date. Bizzcoin’s balance would be held in an e-wallet and traded for profit on a platform he could access, once a pre-set target had been reached. The scheme – which was unregulated – did rely on investors also earning commission by recruiting others to put money in too, in the same way a pyramid scheme is designed.
Keen to benefit from the opportunity, Marcus made two bank transfers, each of £24,000, to the Bizzcoin firm in 2020. The first was transferred to a personal account in one of the brothers’ names, the second to the travel agency’s business account.The promotional material was professionally produced and the business appeared genuine and trustworthy, though there were a number of ‘red flags’ evident that could have prompted Marcus to make further enquiries before sending any of his hard-earned money.
Those warning signs included the fact that:
- No contracts, receipts, or documentation were provided.
- A guaranteed return was promised, which is unrealistic.
- Payments were made via personal and travel agency accounts rather than through a regulated exchange.
However convincing it may have been on the face of it, the scheme’s structure was suspect, to say the least, and should have raised suspicions that would have indicated that the entire set-up wasn’t legitimate. He said the bank didn’t have any preventative measures in place, nor did they contact him ahead of the transfer to warn him that he may be about to lose a substantial sum of money.
And so, he transferred thousands of pounds to the scammers.
At first, Marcus did receive some dividends from the investment. He was even paid a £2,500 commission after introducing his own cousin to Bizzcoin, and convincing him to invest.
But things took a downturn soon after as he received word from the owners that the company had had its assets seized and all funds had been frozen. He was told that investors would be unable to withdraw a penny until the accounts were able to trade as normal. His attempts to recover any of his money were in vain and he hit a brick wall after six months, when the Bizzcoin firm owners – who had only ever communicated through WhatsApp or on Zoom calls – stopped responding to his calls and messages.
Marcus believes that more than 100 investors have fallen foul of the brothers’ fraudulent activities and he estimates that the fraudulent pair have made several millions from their Bizzcoin scam, and have used part of their ill-gotten gains to buy property abroad. The friend who originally introduced him is also owed around £50,000.
After four years of unsuccessfully challenging his bank, believing they should have done more to protect his money, he contacted Barings Law. Experts from our bank fraud department examined the details of his case, specifically with a view to whether his bank should have intervened and prevented Marcus from losing thousands of pounds.
The bank had rejected his previous claim as no fraudulent transactions had taken place and therefore there’d been no error evident by them. He had, they reasoned, authorised the transactions and they had no cause to think he was becoming the victim of an authorised push payment scam (commonly known as APP fraud).
We set out a case on Marcus’ behalf and in our letter of claim to the bank we informed them that we believed they had to bear some responsibility for his losses as they failed to exercise reasonable skill and care when executing his instructions. We put it to them that, had they carried out adequate checks based on his usual spending habits and trends, they would have had reasonable grounds to intervene.
We stated that the transactions were unusually high and out of the ordinary and they failed to meet their regulatory obligation to protect their customer.
The bank initially refused to uphold Marcus’ complaint or consider refunding him any of the money he had lost. It argued that both transfers, while substantial amounts, were made to a registered business and a personal bank account and the bank would have had no reason to intervene, and no way of knowing that he was intending to buy cryptocurrency.
The complaint was referred to the Financial Ombudsman Service (FOS) to make the final decision. The FOS decided that both Marcus and the bank should share liability for the loss that the client suffered. The FOS investigator considered that the bank couldn’t prove that it warned Marcus by way of a phone call that would have resonated with him and would most likely have prevented his loss. The FOS investigation also referred to the red flags that were evident and that should have alerted Marcus to the scam, such as a lack of proper documentation and promises of returns that were simply too good to be true.
Given the bank’s failures and Marcus’ own shortcomings, the FOS made the decision that the bank should refund half of the money he lost in the scam, plus 8% simple interest applied since the date it first refused Marcus a refund.
This meant Marcus was awarded more than £28,000 in compensation.*
For more information on APP scams read here – What Is Authorised Push Payment Fraud? – Barings Law
*Amount is before fees and disbursements
