Lloyds Bank PLC · DRN-6161036

The complaint Mr W has complained that Lloyds Bank PLC won’t refund money he has lost to a scam. What happened The details of the complaint are well known to both parties, so I will not repeat them again here. Instead, I will focus on giving the reasons for my decision. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. Having done so, I agree with the investigator’s findings for broadly the same reasons, I will explain why. I’m very aware that I’ve summarised this complaint briefly, in less detail than has been provided, and in my own words. No discourtesy is intended by this. Instead, I’ve focused on what I think is the heart of the matter here. If there’s something I’ve not mentioned, it isn’t because I’ve ignored it. I haven’t. I’m satisfied I don’t need to comment on every individual point or argument to be able to reach what I think is the right outcome. Our rules allow me to do this. This simply reflects the informal nature of our service as a free alternative to the courts. In broad terms, the starting position in law is that a bank is expected to process payments that their customer authorises them to make. It isn’t disputed that Mr W knowingly made the payments from his account and so, I’m satisfied he authorised them. Therefore, under the Payment Services Regulations 2017 and the terms of his account, Lloyds are expected to process Mr W’s requests, and he is presumed liable for the loss in the first instance. However, taking into account the regulatory rules and guidance, relevant codes of practice and good industry practice, there are circumstances where it might be appropriate for Lloyds to take additional steps or make additional checks before processing a payment to help protect customers from the possibility of financial harm from fraud. The question then arises whether Lloyds ought reasonably to have held such suspicions or concerns in relation to Mr W’s payments - and if so, what might’ve been expected from a proportionate intervention at that time. Further to that, where there is an interaction between a customer and a bank before a high value payment is processed, as there was here, I’d expect the bank to take reasonable steps to understand the circumstances of that payment. So, taking all of this into account, I need to decide if Lloyds acted fairly and reasonably in their dealings with Mr W when he made the payments. Specifically, whether they should’ve done more than they did before processing them – and if they had, would that have made a difference. I also need to decide if Lloyds could’ve reasonably recovered the lost funds.

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Having done so, I agree with the investigator’s findings that the payment Mr W made on 24 June 2024 for £19,800 (payment four) ought to have been concerning; such that Lloyds should have intervened at that time to indicate he could be at risk of fraud. I say this because, it is a significant value, which is uncharacteristic of Mr W’s usual expenditure. Secondly this was the third payment Mr W had made that day in relatively quick succession to a cryptocurrency provider. This is a common hallmark of a cryptocurrency scam. As such, I am satisfied Lloyds ought to have intervened on this transaction. While this is the first transaction I deem appropriate for Lloyds to have intervened on, there were also further transactions, following payment four, which I am also of the opinion ought to have triggered Lloyds’ fraud detection systems. Which I will come on to address. I have considered if Lloyds did intervene and if the intervention was proportionate. Having considered the evidence provided, I am aware that Lloyds intervened via human intervention on several occasions, which given the value and frequency of the payments along with some aggravating factors, I am satisfied human intervention was proportionate. Between 25 June and 22 October 2024 Lloyds intervened eight times. I accept that each differed in the quality of the intervention provided and as the investigator highlighted during some of the interventions the advisor didn’t probe far enough to establish the circumstances surrounding the payments and his overall intentions with the investment. That said, some of the interventions I deem to have been satisfactory. However, what is apparent is that in each of these calls Mr W didn’t provide the advisors at Lloyds with accurate information. For example, on several occasions Mr W told the advisors at Lloyd’s he was investing alone and not under guidance of another, and he hadn’t been open about how he came across the ‘investment opportunity’ Notably on one occasion, on 3 September 2024, the advisor at Lloyds explained that due to investment scams becoming increasingly common, she wanted to explain how they worked. After outlining similar circumstances to how Mr W came across the scam and how the scam evolved (therefore this ought to have resonated with him) Mr W still chose to proceed. Similarly, the intervention call which took place on 22 September 2024, also outlined how investment scams work and the use of fake platforms. During this call, the advisor also mentioned that scammers also ask consumers to lie to advisors at the banks during intervention calls, but Mr W stated this was not the case in his circumstances. Having reviewed the scam conversations between Mr W and the scammer I can see that not only was the scammer providing advice regarding the ‘investment opportunity’ but also coaching him on how to answer the questions. I can see correspondence between Mr W and the scammer where Mr W shared challenges from financial business requesting more information for security purposes. Mr W shared this with the scammer and was seeking guidance on how to bypass those systems. On top of this I can see Mr W’s testimony which was submitted by his representative which says: “The scammers coached your customer on how to respond to questions from the bank and cryptocurrency providers. They instructed him to say that he had been trading in cryptocurrency for some time and was acting on his own. This coaching helped to bypass the security measures put in place by the bank and cryptocurrency platforms” This corresponds with how Mr W answered his questions during multiple interventions with Lloyds. So while I agree, some of the interventions Lloyds carried out could have been stronger

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(although I have to bear in mind that the level and depth of questioning has to be proportionate to the situation – I have to consider that Mr W shouldn’t have been subjected to an interrogation) I can also see Mr W didn’t provide accurate answers to the questions Lloyds asked. This was due to him being under the spell of the scammer. By not providing accurate answers to Lloyds, it denied it the opportunity to identify the true risk Mr W faced, take appropriate action and it provided false reassurances to the bank that his payments were genuine. Even if Lloyds have intervened on payment four (or subsequent payments which weren’t subject to an intervention) I am satisfied on balance Mr W would have answered the questions in a similar way. I say this because, I am persuaded Mr W was so heavily under the spell of the scammer that any intervention carried out wouldn’t have broken the spell. This is supported by the fact that Mr W’s wife had also raised concerns which he referred to as her being ‘sceptical’. I have also been provided with other evidence form third party institutions which shows Mr W chose to proceed despite their concerns/warnings/interventions. So, I am satisfied its’ unlikely it would have prevented his losses. Mr W has said he was not told to lie to the bank and given warning about the importance of that. But I respectfully disagree. On 26 June 2024, the advisor says: “And they’re telling customers if it flags up for a security check to lie to the bank about this payment. Has anything like that happened?” On the 4 September 2024, the advisor says: “We are experiencing investment scams at the moment particularly in relation to cryptocurrency payments, so I am going to ask you a few questions, so it’s really important you listen carefully and answer them truthfully, if you don’t and it transpires that you’ve been a victim of a scam, you’re likely not to get your money back.” This clearly outlines the consequence of not providing accurate information to the questions the advisor may ask. And on 22 September 2024 the advisor says: “In this type of scam, it is very, very, common the scammers will ask a customer to lie to us as to why they’re doing the payment…” As such, I am satisfied the bank asked Mr W if he had been told to provide inaccurate information to help bypass security questions and also inferred the consequences if he does and it turns out to be a scam. Therefore, I am satisfied that Mr W was more persuaded by the scammer and believed it was a genuine investment opportunity, to the extent Lloyds wouldn’t have been able to break the spell (similarly to other institutions) and unveil the scam. Therefore, I can’t reasonably hold Lloyds responsible for this. I have gone on to consider if Lloyds took reasonable steps to try and recover the funds once it had been made aware of the scam. It’s important to note that Mr W didn’t ask Lloyds to send the money directly to the scammer but instead to a legitimate cryptocurrency exchange (to an account in his own name under his control). Lloyds did as Mr W requested. So, it was always highly unlikely that Lloyds would be able to facilitate the recovery of the payment after they were moved on from Mr W’s wallet to the scammers.

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For the payments made by debit card the chargeback process is relevant here. The chargeback scheme is a voluntary agreement between card providers and card issuers who set the scheme rules and is not enforced by law. A chargeback isn’t guaranteed to result in a refund; there needs to be a right to a chargeback under the scheme rules and under those rules the merchant or merchant acquirer can defend a chargeback if it doesn’t agree with the request. We would only expect Lloyds to raise a chargeback if it was likely to be successful. Based on the available evidence this does not look like a claim that would have been successful. So, it follows that I won’t be asking Lloyds to do anything further. Mr W has mentioned that he was vulnerable at the time the scam took place, and this should be taken into consideration. However, Mr W hadn’t communicated his vulnerability. So, we would be relying on advisors at the bank to identify vulnerability during its interaction with Mr W. Having listened to the interactions I am not persuaded there was anything to indicate Mr W was vulnerable or for Lloyds to take extra precautions beyond what I have already mentioned above. All things considered, and despite my natural empathy for this cruel scam and the situation Mr W finds himself in having lost his money, I’m not persuaded Lloyds taking different actions would have prevented the payments being made, or the loss that ensued, for the reasons I have explained. It follows that I do not consider it fair or reasonable to require Lloyds to do anything beyond what it has already done for this complaint. My final decision My final decision is that I don’t uphold this complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr W to accept or reject my decision before 27 April 2026. Jade Rowe Ombudsman

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