Not upheld: scam/fraud - failure to prevent investment fraud (pump and dump scheme) complaint against Lloyds Bank PLC

Decision detail

Summary

Mr D lost approximately £10,000 after being recruited into a fraudulent investment chat group that orchestrated pump and dump scams. He sent over £20,000 to legitimate trading platforms to purchase shares based on scammer recommendations, initially making profits on early trades but suffering significant losses on a later recommendation. Mr D complained to Lloyds Bank PLC, arguing it should have done more to protect him from the scam. The ombudsman found that while Lloyds should have issued a tailored written warning for new payee transactions on 8 April 2025, it was unlikely such a warning would have prevented the fraud given the legitimate nature of the platforms and shares involved, and the difficulty in identifying pump and dump scams. The complaint was not upheld.

The Ombudsman's reasoning

While Lloyds should have provided a tailored written warning for new payee transactions on 8 April 2025, the ombudsman found it unlikely such a warning would have prevented the fraud. The transactions involved legitimate trading platforms and genuine shares, not typical fraud hallmarks. Pump and dump scams were not common at the time and are particularly difficult for banks to identify since victims purchase legitimate shares and only discover the fraud after the fact. The profitable trade Mr D had already made would have reassured both him and Lloyds. The specific transaction that caused Mr D's loss occurred at a point where Lloyds would not have had reason to intervene, making it difficult to identify the scam at a suitable intervention point.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website