Not upheld: scam reimbursement and failure to protect vulnerable customer from gambling harm complaint against Lloyds Bank Plc

Decision detail

Summary

Miss M, a vulnerable customer with a gambling addiction, complained that Lloyds Bank Plc should refund £13,062.53 she lost to Casino K, an unlicensed overseas gambling company, arguing this fell within PSR APP scam reimbursement rules and FCA Consumer Duty protections for vulnerable customers. Although Lloyds had implemented a gambling block on her card transactions after she disclosed her vulnerability, Miss M circumvented this by using Faster Payments to Casino K, which disguised the merchant coding to prevent identification as gambling transactions. The Ombudsman found insufficient evidence that Casino K was operating a fraudulent scam meeting the legal threshold for fraud, and that the disguised payments were not identifiable as gambling-related, meaning Lloyds had no obligation to intervene beyond processing the authorised payments. The complaint was not upheld.

The Ombudsman's reasoning

The Ombudsman found that while Miss M was vulnerable and Lloyds knew this, there was insufficient evidence meeting the high legal threshold for fraud to establish that Casino K was operating a scam. The fact that an overseas gambling company is unregulated and uses questionable practices does not alone indicate fraudulent intent. The payments were disguised by Casino K to prevent blocking, and individual transaction amounts (£108-£433) and frequency patterns were not sufficiently unusual to trigger concern about financial harm. Without evidence of fraud, Lloyds' primary obligation was merely to process authorised payments, which they did correctly. The Ombudsman acknowledged the loophole created by payment disguising but found this did not create a duty for Lloyds to intervene.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website