Pockit customer forced to send bailiffs in battle for locked funds and rent money
A customer of UK fintech start-up Pockit, which raised half a million in its crowdfunding debut back in December, has sent bailiffs round to the company’s Wales-based office to recover hundreds of pounds which have been locked since 28 March.
The customer deposited £250 into his Pockit account, which was later locked with no explanation. Pockit blocked the customer’s Twitter account and his email, making it impossible for him to contact the firm directly.
With issue fees, Pockit owes the customer a total of £352 according to the ‘Request for Warrant of Control’ document he sent FinTech Futures.
“I nearly lost my home”
The customer initially took Pockit to the small claims court. But he says this was ignored by the company. So, he then requested a County Court judgment (CCJ) against the fintech start-up. This was also ignored.
“I just really hope the bailiffs can recover my money,” he told FinTech Futures in the lead up to the visit. “I so desperately need it for my family. I nearly lost my home as that money was my rent money.”
FinTech Futures understands that the bailiffs did in fact attend Pockit’s rented office at Basepoint Business Centre in Chepstow, a town on the border of Wales. It is as yet unclear how the funds are being recovered.
On 14 May, following the bailiff visit, the customer still had not heard anything or received his funds.
Approached for comment, Pockit said it “only restricts access to customer accounts when we detect any form of suspicious activity”.
It added: “Unfortunately, we are unable to provide specific reasons as to what may trigger an account restriction. [..] We endeavour to keep all customers updated on the process as regularly as is practical.”
The company did not acknowledge the bailiff visit in its comment.
When FinTech Futures first approached Pockit for comment, the press email on its website bounced. The fintech start-up also claims its telephone lines are “temporarily closed” due to COVID-19.
FinTech Futures then reached out to the company’s old PR firm. Less than 24 hours later, this PR firm was once again representing Pockit.
Not an isolated issue
A number of other customers have complained over locked accounts. According to consumer advocacy website ‘pissedconsumer.com’, the start-up has had 345 reviews on the site since May 2018, at time of writing.
The website totals £110,000 in claimed “losses” by customers. This would mean, on average, the amount locked per customer is somewhere around £319.
Another customer, whose money was also frozen by Pockit, told FinTech Futures she reached out the Financial Conduct Authority (FCA), which told her to take the company to court.
She did just that. She said Pockit took six weeks to say it wanted phone mediation, and then failed to turn up to the call.
“I’m not in a good place because of what Pockit is doing and I’m quite depressed,” she says.
The customer took out a Pockit ‘Simple Account’ in November, which allows users to top up a card with a cap of £5,000. She took out two, one for her and one for her husband, in the lead up to an operation set to cost her around £10,000.
After trying to transfer money out of the accounts to a PayPal account, she got blocked the second time and the funds were locked.
The customer told FinTech Futures that on 10 May, a journalist from The Times spoke to Pockit’s CEO, Virraj Jatania.
“They told me I would be getting my money back. I told him [the journalist] I have had no such contact or information from Pockit. I think this was done to appease him.”
Hiding behind the law
Under 2017-enacted laws, known as the Money Laundering, Terrorist Financing and Transfer of Funds Regulations (MLRs), companies like Pockit can limit communication with customers whilst they review their validity.
This is to ensure companies don’t ‘tip-off’ potential fraudsters or criminals.
But there is no specified time frame in the law as to how long companies can carry out these checks. Which means Pockit can, under current UK law, keep funds locked for as long as it likes without maintaining contact.
According to Pockit’s Terms and Conditions, if a customer doesn’t use their account for six years, the company gets to keep the money in it. Regardless of whether some of that inactivity was due to locked funds.
The Financial Ombudsman received 97 complaints about Pockit between January and April 2021, according to a Which? report.
That’s a more than nine-fold increase on the ten complaints which were reported over the same period last year.
Backed by Alex Ferguson
Pockit offers current accounts with a prepaid Mastercard attached. Its co-founder and CEO, Jatania, claims to help those rejected by high street banks.
The fintech’s customers can send and receive money, make payments online and in-store, as well as send money abroad to more than 29 countries.
The start-up claims to serve half a million registered users. It is also backed by the UK government’s Future Fund, which matched its December crowdfunding campaign on Crowdcube – taking the total raised to £1.2 million.
Since launching in 2014, the start-up says it has raised more than £24 million. In January, Pockit also announced the opening of a Newcastle office, creating 30 new jobs.
The money for the expansion came from its £15 million Series B at the end of last year. According to Crunchbase, investors in the round included former Manchester United manager, Sir Alex Ferguson, London venture capital firms Concentric and Perscitus – the latter also backs Atom Bank and Money Box – as well as Ingenico founder Harold Mechelynck, and the European Union-backed North East Development Capital Fund.
One of Pockit’s directors is Mark Newton-Jones – former CEO and non-executive director of British retailer Mothercare.
Mothercare UK went into administration in November 2019, closing all 79 of its UK stores, which saw 2,500 jobs lost.
A £4.8m loss in 2019
For the year ended 2019, Pockit filed its audited financial accounts on 28 April – its latest to be published. They show the start-up made a loss that year of £4.8 million, but revenues did increase by 23%, and its loss was less than the one it made in 2018 – at £5.1 million.
In November 2020, Pockit migrated its payment services away from Wirecard Card Solutions (WCS) — the UK subsidiary of Wirecard — and moved them to PayrNet, a subsidiary of Railsbank and the new owner of WCS.
Months prior, the FCA suspended Wirecard’s UK subsidiary from operating, prompting a handful of fintech start-ups — Pockit among them — to suffer downtime of certain key services.
The fintech had to suspend customers’ current accounts temporarily. This stopped customers from being able to get access to their money.
Some Pockit users said on Twitter at the time that they got no warning before their accounts were suspended. The account provider eventually got back online with the help of the FCA lifting the suspension.
But now, with Pockit’s account verification checks locking many customers out of their accounts for months at a time, it seems the upset caused by the FCA suspension last year is still very much a reality for some of them.