Archie thought he'd been careful and done his research, but didn't have time to view the vehicle and didn't pay attention to his bank's warnings
This case study was developed with the help of the Payment System Regulator, to illustrate the FPS and CHAPS reimbursement rules.
What happened
Archie was looking for a second-hand Range Rover, but everything he saw was outside his budget. On the advice of friends, he went to an online marketplace, where he found a brand new Range Rover for less than any he’d seen elsewhere.
Archie contacted the seller, asking why the car was so cheap. The seller said it had been repossessed and so needed to be sold on quickly – an explanation that Archie accepted. He thought a repossessed vehicle might be sold cheaply in the same way that repossessed houses sometimes are.
Archie didn’t question why the Range Rover was advertised as ‘brand new’ when the seller said it had been repossessed. He agreed to pay a deposit of £15,000, but as he tried to pay the deposit this warning appears.
“Warning! Could this be a scam?
“Buying a vehicle without seeing it means you’re at risk of being defrauded.
“Have you seen the vehicle in person? If the seller doesn't allow this, they could be a fraudster
“Have you undertaken a hire purchase investigation (HPI) check to ensure the details match a legitimate car for sale?
“Is the price too good to be true? If it is, it’s probably a scam.”
Archie read the warning and decided to ask the seller some more questions to reassure himself that the seller was genuine. He texted the seller to ask if he can view the Range Rover. The seller told him that wasn’t possible, adding he needed to sell the car quickly and someone else was offering to pay that day.
Archie had his heart set on the Range Rover. But just in case, he searched online for ‘HPI’ and found some information on the RAC website. He read that an HPI could check a vehicle’s history to reveal, for example, inaccurate mileage or cars being sold on after they’ve been scrapped.
He didn’t think those risks were relevant however, or that the price was too good to be true. So he tried the payment again and it went through.
Assessment under the FPS and CHAPS reimbursement rules
The intervention may have met the minimum requirements in the standard set out in the guidance. It’s specific to the transaction, scam and consumer. It was also brought to Archie’s attention and warned that the transaction might be part of a scam.
However, we would also want to consider whether Archie was ‘grossly negligent’ because he didn’t heed it.
The warning could have been better. The advice about doing an HPI check isn’t particularly helpful. And saying that something might be “too good to be true” is not enough because it’s a matter of opinion.
The warning didn’t get across to Archie that he was most likely falling victim to a scam. And Archie was easily able to ignore it because his research into HPI checks suggested they wouldn’t be useful. And he didn’t believe the price was too good to be true.
Archie didn’t see the vehicle in person, but the warning didn’t make the risk of not doing so clear enough.
In this case, overall, it’s unlikely that the business could rely on the interventions exception in the new rules not to reimburse Archie.