Partially upheld: scam protection and irresponsible payment processing complaint against Lloyds Bank PLC

Decision detail

Summary

Mr P was victim of a sophisticated cryptocurrency investment scam initiated through a romantic relationship developed on social media. He made 10 payments totalling £82,500 to a cryptocurrency exchange between January and April 2025 before discovering the scam when asked to pay fees to withdraw profits. Lloyds declined to refund the payments, arguing they were authorised and not unusual. The ombudsman found that while the first payment was not suspicious, Lloyds should have intervened at the second payment of £4,000 on 21 January 2025 due to the escalating pattern, cryptocurrency involvement, and inconsistency with Mr P's transaction history. However, the ombudsman also found Mr P bore responsibility for insufficient due diligence on an investment introduced by someone he had recently met online. Consequently, Lloyds was ordered to refund 50% of losses from the second payment onwards (£40,250) plus 8% interest.

The Ombudsman's reasoning

The ombudsman found that while banks must generally process authorised payments, they should monitor accounts for unusual transactions and take protective action where customers face heightened fraud risk. The first payment was not suspicious in isolation, but the second payment of £4,000 on 21 January 2025 should have triggered intervention because: (1) it was significantly larger than the first payment made just 8 days earlier; (2) it represented a pattern typical of investment scams; (3) it involved cryptocurrency, which carries elevated fraud risk; and (4) it was inconsistent with Mr P's previous transaction history. A proportionate response would have been to ask questions about the investment and provide a written warning about common investment scam features. Given the scam's sophistication and the genuine-appearing platform, the ombudsman found Mr P bore some responsibility for not conducting adequate due diligence on an investment introduced by someone he had never met in person and had only recently begun communicating with. Therefore, a 50% split of responsibility was fair.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website