Not upheld: irresponsible payment processing / failure to intervene in fraud complaint against Lloyds Bank PLC

Decision detail

Summary

Mr C lost £10,164.23 to a job scam after being recruited by a fake recruiter to complete review tasks for high commission. He made 14 payments from his Lloyds account to crypto exchanges between 28-30 May 2025, with amounts escalating significantly on 30 May. Lloyds rejected his refund claim as the payments went to accounts in his own name. The ombudsman found that while Lloyds should have intervened with automated warnings at payment 12 due to elevated crypto risk, evidence from Firm R showed Mr C had deliberately selected an incorrect payment reason, ignored strong fraud warnings, and was likely being coached by the scammer. Therefore, the ombudsman concluded that even if Lloyds had intervened, it would not have prevented the loss, as Mr C would probably have circumvented checks or misrepresented the payment purpose.

The Ombudsman's reasoning

Although the ombudsman agreed that Lloyds should have implemented automated fraud warnings at payment 12 due to the elevated risk of crypto transactions and the pattern of escalating payments, the key issue was whether such intervention would have prevented the loss. The ombudsman found that Mr C had deliberately selected an incorrect payment reason ('investing' instead of 'not investing') with Firm R, received strong warnings but ignored them, and told the scammer that Firm R was suspicious. This evidence suggested Mr C was either being coached by the scammer or was under the scammer's influence and would likely have circumvented Lloyds' checks or misrepresented the payment purpose. Therefore, even if Lloyds had intervened, it would not have prevented the loss.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website