Not upheld: investment scam - failure to prevent fraud through adequate interventions complaint against Lloyds Bank Plc

Decision detail

Summary

Mrs S and Mr B complained to Lloyds after falling victim to an investment scam involving a fake company (Company D) that convinced Mrs S to invest in cryptocurrency. Mrs S transferred £36,824.64 from her Lloyds account to crypto exchanges and electronic money institutions, funded partly by loans totalling £55,000. Lloyds intervened on 25 April 2025 with strong warnings and again on 1 May 2025 at a branch visit, showing an investment scam video, but Mrs S maintained her cover story. The ombudsman found that while Lloyds should have implemented earlier interventions at payments 3 and 4, and later interventions at payments 13 and 14, the evidence did not support that such interventions would have prevented the losses given Mrs S's deep entrenchment in the scam and coaching by the scammer. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman acknowledged that Lloyds should have implemented proportionate interventions at payments 3, 4, the attempted payment to Firm R, and payments 13 and 14, based on heightened fraud risks including cryptocurrency transactions, multi-stage payments, and large consecutive payments. However, the ombudsman found that Lloyds' actual intervention on 25 April and 1 May 2025 was very strong, with probing questions and scam warnings including the specific scam Mrs S was experiencing. Despite this strong intervention, Mrs S maintained her cover story, having been coached by the scammer and convinced to distrust the bank. The ombudsman concluded that earlier interventions at payments 3 and 4 would likely not have prevented the scam, as Mrs S was already deeply entranced by the scammer just days before, and the scammer had already provided her with plausible cover stories. Similarly, later interventions at payments 13 and 14 would likely have been ineffective given Mrs S's continued belief in the scam and her familiarity with Firm P as a regular payee.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website