Not upheld: fraud claim refusal - alleged scam by building contractor complaint against Lloyds Bank PLC

Decision detail

Summary

C made six payments totalling £85,516 to building company T between November 2024 and February 2025 for refurbishment and extension work on their property. In May 2025, the director of T walked off the job and refused to complete the work, leaving the property in a state of disrepair. C claimed this was a scam and requested Lloyds refund the payments, but Lloyds declined, stating T was a genuine company and C had a civil dispute with them. The ombudsman upheld Lloyds' decision, finding that the payments were not covered by the Reimbursement Rules as they represented a private civil dispute rather than an APP scam, with substantial work having been completed and no evidence of fraudulent deception by T at the time payments were made.

The Ombudsman's reasoning

The ombudsman applied the Faster Payment Scheme Reimbursement Rules which came into force on 7 October 2024. These rules require reimbursement for APP scams where fraudulent deception was used to obtain funds. However, the rules explicitly exclude private civil disputes where a legitimate supplier has been paid but the customer is dissatisfied with the work or service. The ombudsman found that C's payments went to the intended recipient (T) for the intended purpose (building work), and that substantial work was completed. The evidence showed that the relationship broke down when C refused to make further payment until agreed work was completed, and X then terminated the contract. There was no evidence that T took the funds with a different purpose in mind or that the funds were not used for the agreed purpose. The ombudsman also found that even if Lloyds had intervened, they would not have been concerned given T appeared to be a legitimate company completing work as agreed.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website