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

Decision detail

Summary

Ms C complained that Lloyds Bank PLC should refund £650 she lost to a scam involving a fraudulent builder. Ms C made two cash withdrawals at a Post Office (£300 and £150) plus had £200 in cash, which she handed to the scammer who never returned. Lloyds declined to refund the loss, and the FOS Investigator agreed. The ombudsman upheld this decision, finding that the withdrawals were not sufficiently unusual or suspicious to warrant Lloyds' intervention, the Post Office had followed correct procedures, and recovery was impossible as the funds were withdrawn in cash. Although Ms C was vulnerable, Lloyds had no knowledge of this at the time and nothing in the transaction pattern should have raised concern.

The Ombudsman's reasoning

Under the Payment Services Regulations, Ms C is presumed liable for authorised payments in the first instance. While banks should take proactive steps to prevent suspicious transactions, there must be a balance between identifying potentially fraudulent transactions and minimising disruption to genuine ones. The withdrawals were not unusual or suspicious given the account's typical transaction pattern and the relatively low amounts involved. The withdrawals did not warrant Banking Protocol invocation. As the Post Office processed the withdrawals, it was their responsibility to follow correct procedures, which they confirmed they did. Ms C's vulnerabilities were not apparent to Lloyds at the time, and nothing in the withdrawal process should have raised concern. Since the funds were withdrawn in cash and handed directly to the scammer, recovery was impossible regardless of Lloyds' actions.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website