Not upheld: scam and fraud liability complaint against Lloyds Bank PLC

Decision detail

Summary

Y, a limited company, complained that Lloyds Bank PLC should refund money lost when X, a former director, was scammed into making 78 payments totalling a significant sum between December 2022 and December 2023. X believed they were helping someone in financial difficulty but later discovered it was a scam. The ombudsman found that despite the payments being made from Y's business account, X made them in his personal capacity using personal savings and personal loans, as evidenced by X's own messages and statements. Since the loss was X's personal loss rather than Y's business loss, the ombudsman determined it would not be fair to require Lloyds to refund Y, and the complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that while X authorised the payments, the evidence clearly demonstrates X made them in his personal capacity, not on behalf of Y. X's own statements in messages to the scammer, his responses to questions, and the fact that payments were not recorded as business expenses all support this conclusion. Since X made the payments for personal reasons using a mix of personal savings and personal loans, the loss is X's personal loss, not Y's business loss. Therefore, even if Lloyds had failed to meet its fraud protection obligations, it would not be fair to ask Lloyds to refund Y, as Y did not suffer the loss.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website