Not upheld: unauthorized ATM withdrawals and service failures in complaint handling complaint against Lloyds Bank PLC

Decision detail

Summary

Mr R complained that Lloyds Bank PLC wrongfully refused to refund disputed ATM withdrawals made from his account using his debit card and PIN. The ombudsman examined technical evidence showing the genuine card and PIN were used with a single correct entry, and found no plausible explanation for how an unknown third party could have obtained both without Mr R's knowledge or consent. Although Mr R reported his card lost eight days after the last disputed transaction and immediately blocked it, the ombudsman found the pattern of activity—including no balance checks and no further attempts after blocking—suggested Mr R himself made the withdrawals. The ombudsman upheld Lloyds' decision to hold Mr R liable for the transactions but acknowledged service failures in the complaint investigation, finding the £90 compensation already paid by Lloyds to be fair and reasonable.

The Ombudsman's reasoning

The ombudsman applied The Payment Service Regulations 2017 and Section 83 of the Consumer Credit Act 1974, which establish that banks are liable for unauthorized transactions unless the consumer or their agent used the facility or the credit token was in a third party's possession with consent. The technical evidence showed the genuine card and PIN were used with only one correct PIN entry attempt, suggesting the person entering it knew the PIN. The ombudsman found no plausible point of compromise with anyone known to Mr R. While the ombudsman acknowledged that an unknown third party could theoretically have observed the PIN at an earlier date and then stolen the card eight days later, this scenario was deemed unlikely. The pattern of account activity—no balance checks, no rapid draining of funds, and no further attempts after blocking—suggested the most likely explanation was that Mr R himself made the withdrawals. Without an alternative plausible explanation and no identified point of compromise, the ombudsman found it reasonable for Lloyds to hold Mr R liable.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website