Not upheld: fraud reimbursement / APP scam claim complaint against Lloyds Bank PLC

Decision detail

Summary

Mr P paid £2,415.44 to Company I for sliding doors that were never delivered or installed, and Company I subsequently entered administration. Mr P claimed this was fraud and sought reimbursement from Lloyds under the Faster Payments Scheme Reimbursement Rules. The ombudsman rejected the complaint, finding that the transaction constituted a private civil dispute rather than an APP scam. Although Mr P suffered a genuine loss, Company I was a legitimately registered business with a long trading history, positive customer reviews, and proper administration procedures, which did not support a finding of fraudulent intent. The ombudsman concluded that business failure, rather than fraud, was the more probable explanation for the non-delivery of goods.

The Ombudsman's reasoning

The ombudsman applied the high threshold for establishing fraud (balance of probabilities standard) and the Reimbursement Rules definition of APP scam. The payment did not meet the APP scam definition because: (1) Mr P paid the company he intended to pay (Company I was legitimately registered and trading under a disclosed trading name); and (2) there was insufficient evidence of dishonest intent to defraud. Company I's legitimate business history, positive reviews, proper administration process, and the beneficiary bank's lack of concerns all supported that Company I was a genuine business that failed, rather than a fraudulent scheme. The non-delivery of goods, while unfortunate, does not automatically indicate fraud and is more consistent with a civil dispute over goods/services.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website