Not upheld: scam protection / failure to intervene in suspicious transactions complaint against Lloyds Bank PLC

Decision detail

Summary

Mrs S fell victim to a work-from-home scam and lost £1,674 across six payments. Lloyds refunded the first three payments made via faster payment but declined to refund three subsequent payments made to a cryptocurrency platform via open banking. The ombudsman upheld Lloyds' position, finding that the disputed payments were not significantly out of character for Mrs S's account activity, with similar amounts having been made in the prior six months. Although cryptocurrency transactions carry elevated scam risk, the ombudsman concluded that Lloyds was not required to intervene as the payments appeared legitimate and were initiated from the customer's registered device, and that requiring Lloyds to repay from its own pocket would be unfair without evidence of wrongdoing by the bank.

The Ombudsman's reasoning

While firms should intervene in unusual and out-of-character transactions to protect customers from financial harm, they must balance this against inconveniencing legitimate transactions. The disputed payments (£319, £878, £350) were individually under £1,000 and collectively just over £1,500. The payment amounts and frequencies were consistent with Mrs S's prior account activity over the preceding six months. Although the payments to a cryptocurrency platform represented a first for this customer and carried elevated risk, Lloyds could take comfort that they appeared to be under Mrs S's control and were initiated from her registered device via open banking. The fact that Mrs S was unaware the payments were to cryptocurrency does not make them unauthorized. Without stronger evidence that Lloyds did something wrong, it would be unfair to require Lloyds to repay from its own pocket money lost to a scam.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website