Surge in Fraud Reimbursement Complaints Against Revolut Despite its De-Risking Strategy!

Charlene Lensburg
Mon, 22 Jul 2024 16:32:35 +0000
Compliance, Fintech, Investors Protection, Monzo, Revolut, Starling

Revolut‘s clients are primarily younger, tech-savvy individuals who favor online services. This demographic also faces significant risks associated with online scams, highlighting the need for ongoing education and vigilance in digital finance. According to the UK’s Financial Ombudsman Service (FOS), customer complaints against Revolut for denying fraud reimbursement claims have surged by 35% in H2/2024, totaling 2,208 complaints.

Ombudsman Findings

Bloomberg’s investigation revealed that in nearly half of all reviewed and closed cases last year, the FOS ordered Revolut to reimburse customers for their losses. FOS ordered Revolut to reimburse customers in nearly half the cases it reviewed and closed; additional data from a pair of law firms representing Revolut’s customers show the FinTech has continually denied customers’ claims.

For the entirety of 2023, the FOS issued 3,458 fraud-related judgments (views) for Revolut. This figure is higher than any other financial institution in the UK, with Barclays coming in second at 3,009 views and Lloyds at 2,332 views.

Since mid-2023, Revolut has been pursuing a de-risking strategy in which private and business customers are terminated if they represent too high a risk from Revolut’s point of view. Apparently, this has not yet had an impact on the 2023 data.

Trustpilot is not yet aware of this possible dissatisfaction. With more than 155,000 reviews, the UK fintech unicorn still has a 4.1-star rating with a corresponding “Great” trust level. However, it should be noted that most of the 5-star ratings were made by customers invited by Revolut (invited).

The cyberfinance rating agency PayRate42 also includes Revolut on its Green Compliance and Green Risk lists.

Go to the Revolut profile on PayRate42.

New Regulatory Rules

This spike in complaints comes at a critical time, as the Payment Systems Regulator is set to implement new rules in October. These regulations will require payment service providers (PSPs) in the UK to reimburse consumers who fall victim to authorized push payment (APP) scams when using Faster Payments. The reimbursement amount, capped at £415,000, will be equally split between the sending and receiving PSPs.

Industry Concerns

The upcoming regulatory changes have raised concerns within the neobanking community. Neobanks, including Revolut, fear the financial impact of these new rules on their bottom lines. Consequently, there has been intense lobbying to reduce the maximum reimbursement amount to £30,000 and to introduce a ‘tech levy’ on social media firms, which are often the origin points of such scams.

Comparisons with Other Neobanks

Revolut is not alone in facing scrutiny over its fraud reimbursement practices. Monzo and Starling, two other prominent challenger banks in the UK, were found to be among the lowest-scoring firms for reimbursing victims of APP fraud, according to 2022 data from the Payment Systems Regulator. Despite their reputation for strong customer service, these banks lagged behind their larger counterparts in supporting customers deceived into making payments to fraudulent accounts.