Not upheld: Authorised Push Payment (APP) scam claim / refund request complaint against Lloyds Bank PLC

Decision detail

Summary

Mrs B paid £520 to company L for an induction hob installation on 23 May 2025, but L failed to deliver the product and eventually stopped communicating. Mrs B claimed this was a scam and requested a refund from Lloyds, which declined on the basis that it was a private civil dispute. The ombudsman upheld Lloyds' decision, finding that while Mrs B did not receive the goods/services, the evidence did not support that L intended to defraud her from the outset. L was a legitimate registered company with a history of satisfactory service to Mrs B, had communicated with her after payment offering solutions, and the beneficiary bank showed no concerns—all factors inconsistent with typical fraud. The ombudsman concluded that failure to deliver services, while potentially a breach of contract, does not automatically constitute an APP scam under the Reimbursement Rules.

The Ombudsman's reasoning

The ombudsman applied the Reimbursement Rules definition of an APP scam, which requires criminal deception and either payment to an unintended recipient or for an unintended purpose. The ombudsman found that Mrs B paid the intended recipient (L) and that the key question was whether L intended to defraud her from the outset. The ombudsman concluded that the balance of probabilities did not support fraud because: (1) L was a legitimate registered company with a history of satisfactory service to Mrs B; (2) L communicated with Mrs B after payment and offered solutions; (3) there were many non-fraudulent reasons why a company might fail to deliver services; and (4) the beneficiary bank information showed no concerns. The ombudsman distinguished this from typical scams where fraudsters become uncontactable immediately after receiving payment.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website