Monzo wrongly denied refunds to thousands of fraud and scam victims | Monzo bank

Monzo wrongly denied refunds to thousands of fraud and scam victims | Monzo bank

February 7, 2026 discoverhiddenusacom Business

Monzo, the digital-only bank, is facing scrutiny after data revealed it wrongly denied refunds to over 1,000 fraud and scam victims in the past year. The findings, released by the Financial Ombudsman Service (FOS), highlight a concerning trend in how the bank handles customer complaints related to financial crimes.

Rising Fraud Complaints and Refund Rates

Last year, Monzo incorrectly rejected 34% of the 3,372 fraud complaints referred to the FOS – the highest rate among major British banks. NatWest followed with a 33% incorrect rejection rate, and HSBC at 32%. These rejections relate to various types of fraud, including authorized push payment (APP) scams, chip and pin fraud, and identity theft.

Did You Know? Fraud now accounts for an estimated 41% of all crimes committed in England and Wales.

The Role of the Financial Ombudsman Service

The FOS receives hundreds of cases weekly from individuals who have been victims of fraud and scams. Customers are advised to first address complaints with their financial provider, and then escalate to the FOS if they feel unfairly treated. A spokesperson for the FOS stated they are available to help resolve disputes.

Monzo’s Response and Recent Developments

Monzo attributes some of the rejected cases to fraud incidents that occurred over two years ago. The bank claims to have since invested in technology to prevent fraud, reporting a 2.9-fold increase in the value of fraud prevented in 2025 compared to the previous year. However, the bank was fined £21 million last summer by the City regulator due to weak financial crime controls, including allowing registrations with implausible addresses.

Expert Insight: The high rate of wrongly denied refunds suggests a potential systemic issue in Monzo’s fraud assessment processes, raising questions about the balance between cost control and customer protection.

Adding to the recent challenges, Monzo’s chief executive, TS Anil, announced his departure in February, to be replaced by Diana Layfield, a former Google executive. Despite these changes, Monzo reported a record £60.5 million in pre-tax profit and £1.2 billion in revenue for the year ending March, having grown its customer base to over 14 million.

Government Regulations and Industry Trends

A new government rule introduced in 2024 requires banks to refund most victims of APP fraud. UK Finance reported 185,733 APP cases in 2024, a 20% decrease from 2023, with £450.7 million lost to fraudsters and £267.1 million reimbursed to victims.

Frequently Asked Questions

What types of fraud are covered by these complaints?

Fraud and scam complaints can come from victims of authorized push payment (APP) scams, as well as chip and pin fraud and identity theft.

What should customers do if they believe their bank wrongly denied a refund?

Customers should first complain to their bank, and if they don’t feel they’ve been treated fairly, they should contact the Financial Ombudsman Service.

What is Monzo doing to address these issues?

Monzo states it has continued to invest in technology to stop fraud and has seen a 2.9 times increase in the value of fraud prevented in 2025 compared to the year before.

As Monzo navigates these challenges, it remains to be seen whether its investments in fraud prevention and leadership changes will lead to improved customer outcomes and a reduction in wrongly denied refund claims.