Not upheld: scam loss / investment fraud complaint against Lloyds Bank PLC

Decision detail

Summary

Miss C fell victim to an employment scam where scammers convinced her to pay money to clear negative balances, which she then converted to cryptocurrency and sent to the scammers. She made three payments totalling over £6,000 from her Lloyds account. Lloyds intervened multiple times with probing questions and tailored scam warnings, but Miss C maintained a false cover story about independent crypto investment research. The ombudsman found that Lloyds intervened appropriately and that reasonable proportionate intervention could not have prevented the loss given Miss C's deliberate deception, her coordination with scammers on how to mislead banks, and her willingness to use alternative accounts when blocked. The complaint was not upheld as Lloyds could not be fairly held liable for the loss.

The Ombudsman's reasoning

Although Miss C authorised the payments and Lloyds had an obligation to follow her instructions, they also had a duty to intervene in potentially fraudulent transactions. Lloyds did intervene appropriately given the payment size, speed, and destination. However, Miss C deliberately provided false cover stories, took advice from scammers on how to mislead banks, and stuck steadfastly to a simple and plausible narrative about independent crypto investment. The ombudsman found that given how closely Miss C adhered to her false story and how plausible it was, reasonable proportionate intervention could not have likely uncovered the scam. Miss C would likely have proceeded with payments through alternative accounts regardless. The payments to Miss C's own crypto account were not covered by the CRM Code or PSR's latest rules, and funds already sent in crypto could not be recovered.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website