Not upheld: Fraud reimbursement (APP scams) complaint against Lloyds Bank Plc

Decision detail

Summary

Mr A fell victim to an advance fee scam where a fraudster posing as a timeshare company representative convinced him to pay £7,991.20 in four international payments to receive a supposed refund. After realising the scam, Mr A complained to Lloyds Bank Plc seeking a refund, arguing the bank should have detected and prevented the fraudulent payments. Lloyds declined the refund citing the international payment status. The Ombudsman found the complaint not upheld, determining that the payments were authorised, not sufficiently unusual to warrant intervention, and that APP Scam Reimbursement Rules do not apply to international payments. The Ombudsman noted that whilst banks must protect against fraud, they must balance this against not unnecessarily delaying legitimate transactions.

The Ombudsman's reasoning

Although banks should protect customers against fraud and scams so far as reasonably possible, the starting position under PSR is that liability for authorised payments rests with the payer. The Ombudsman found that Mr A's four payments were not sufficiently unusual to warrant intervention by Lloyds. The payments were spread over two months with gaps between them, the amounts were not particularly high in general terms, international payments are not uncommon, and there was no obvious scam pattern of rapid consecutive payments increasing in value. At the fourth payment, amounts decreased rather than increased. Regarding IBAN checks, Lloyds' terms and conditions make clear this is the customer's responsibility as banks can only conduct payee confirmation checks on UK accounts. The APP Scam Reimbursement Rules do not apply to international payments.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website