Lloyds Bank PLC · DRN-6203348

The complaint Mr D complains that Lloyds Bank PLC is unfairly holding him responsible for the balance of a credit card that was accumulated when he was the victim of manipulation and blackmail. What happened On 14 September 2024, Lloyds approved an application for a credit card account in Mr D’s name. The card and Personal Identification Number (PIN) were sent to Mr D’s home address. Mr D says he didn’t apply for the credit card account; the perpetrators of the blackmail did. He says he only found out about it when he received the card and PIN and was given instructions to buy Euros and make several Automated Teller Machine (ATM) withdrawals. Mr D says he complied, in fear of what would happen to him and his family if he didn’t. Mr D made a number of transactions totalling £14,388.93 between 24 and 29 October 2024 and then met with a person to hand over the cash. He also says he was coerced, threatened and psychologically intimidated into disclosing personal and financial information under extreme distress. Mr D contacted Lloyds’ fraud department on 5 December 2024 to explain what had happened to him. As well as other things, he said wanted it to remove the debt from his credit file as the account was opened fraudulently and remove any adverse information it had recorded on his credit file due to non-receipt of payment. Following a complaint, Lloyds said: • It’s fraud team conducted a full review and the claim was declined. So, it was holding Mr D liable for the disputed transactions. • The card and PIN were sent to Mr D’s address and used for the disputed transactions. • It’s not been contacted by the police, which is unusual given the nature and severity of Mr D’s claim. • The bank hadn’t made any errors, so it can’t agree with Mr D’s complaint. Mr D then referred his complaint to our service where it was considered by one of our investigators. He explained that part of Mr D’s complaint had not yet been addressed by Lloyds (irresponsible lending when approving the credit card application), so our service wouldn’t be able to consider that part until the bank had investigated it first. But separate to that, he felt that Lloyds was entitled to hold Mr D liable for the outstanding balance of the account on the basis that Mr D made the disputed transactions himself. Mr D didn’t agree with our investigator. He provided a lengthy response, including some points that don’t seem applicable to his complaint. But in summary, he said the findings did not properly account for the coercion and terror he was experiencing at the time, his impaired capacity due to fear and depression, and Lloyds’ legal and regulatory responsibilities. As no agreement could be reached, the complaint has been passed to me to decide.

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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 realise this will come as a huge disappointment to Mr D, but in relation to the disputed transactions, I’ve reached the same conclusions as our investigator, for broadly the same reasons. I realise I have no evidence to support Mr D’s claims as he says everything was done via an app that does not retain any messages, but I accept that he was targeted and blackmailed by individuals who made him believe that he and his family were at risk if he didn’t comply with their demands. I’m so sorry to hear that this has happened to him, and the continued impact it has had on his life and wellbeing. This can’t have been an easy time for him at all, and I hope he’s getting the support he needs. But when deciding this complaint, I’ve had to consider the role of both Mr D and Lloyds, as well as the relevant regulations. These are the Payment Services Regulations 2017 (PSRs), and the Consumer Credit Act 1974. In general terms, the bank is liable if the customer didn’t authorise the payments, and the customer is liable if they did authorise them. Here, Mr D has explained he made all the transactions himself. I appreciate he says he didn’t apply for the account himself, which is one of his key reasons for asking Lloyds to write off the outstanding balance, but despite that, he went on to make the transactions he’s now disputing, albeit because of the situation he’d found himself in. I know Mr D has given many reasons for why he did what he did, without alerting the bank or the necessary authorities - with the overall position in that he was protecting his family, but I must consider that the acts of a victim of duress or coercion are treated as their own legal acts, so duress does not negate Mr D’s authorisation for the purposes of the PSR’s. Here, the payments were still being authorised correctly by Mr D, and at the time, I don't think there was any reason the bank would be aware or on notice that he was being blackmailed and threatened. So, I’m satisfied that the disputed transactions can be treated as authorised by Mr D. And in view of the regulations I’ve mentioned above, this means Lloyds is entitled to hold Mr D liable for them. But the matter doesn’t end there, I’ve also taken into account the law, regulator’s rules and guidance, relevant codes of practice and what I consider to have been good industry practice at the time. And I consider Lloyds should, fairly and reasonably: • Have been monitoring accounts and any payments made or received to counter various risks, including money laundering, the financing of terrorism, and fraud and scams. • Have had systems in place to look out for unusual transactions or other signs that might indicate its customers were at risk of fraud (among other things). This is particularly so given the increase in sophisticated fraud and scams in recent years, which banks are generally more familiar with than the average customer. • In some circumstances, irrespective of the payment channel used, have taken additional steps, or made additional checks, before processing a payment, or in some cases declined to make a payment altogether, to help protect customers from the possibility of financial harm from fraud. So, I need to decide whether Lloyds acted fairly and reasonably in processing the transactions from this credit card account, or whether it should’ve done something more. And, if it had, I need to consider whether this would’ve made any difference.

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I’ve considered that in a matter of days, £14,388.93 was spent using the credit card, for what could be considered fraudulent account behaviour – cash withdrawals and several currency exchange transactions on an account that had only been opened the month before. But, had Lloyds identified this activity and attempted to contact Mr D about it before processing some of the transactions, I’m aware that it didn’t have Mr D’s genuine telephone number, so would’ve likely contacted the person who made the application who most likely would’ve confirmed the activity as genuine. And, had it somehow been able to speak with Mr D himself, I’m aware from other complaints he’s raised with our service that there were occasions where he was questioned about account activity in real-time and was dishonest in his answers to ensure the activity was completed without issue – because of, at the time, the fear for his and his family’s safety. So, on balance, and in view of his continued assurance that he wanted to do everything possible to protect his family from harm, I’m not persuaded that had Lloyds intervened and questioned the account activity when it was taking place, that this would’ve resulted in a different outcome here. Customer service Mr D has raised concerns about the service he received from Lloyds during the duration of his fraud claim. Including the following: • Not being given a specific contact, ideally an email address as he struggles to make calls when he works away, but this request was denied. • He wasn’t given any case reference even after several requests. • He was told his father couldn’t speak on his behalf unless they were both present together. • Lloyds used the contact details provided on the application to try and communicate with him – which were the fraudsters details. • Despite going through the complaints process, Lloyds continued to seek repayment of the outstanding balance from Mr D. I accept that Lloyds’ fraud department uses the telephone as its method of communication and doesn’t routinely assign specific case handers to individual fraud claims. And I appreciate it would’ve been frustrating that the bank wouldn’t deal with Mr D’s father when he was working away, but it’s reasonable for a bank to insist it speaks directly with its customer when discussing their account. I appreciate the situation with Mr D’s job and his difficulties using the telephone, but I can’t say the bank was wrong in view of this. And, whether the bank assigns a specific case handler to fraud claims is a business decision for Lloyds to make. I note Mr D felt it would’ve been appropriate for the bank to suspend collections activity for the outstanding credit card balance whilst he was going through the complaints process, but the bank is under no obligation to do that even when the balance is reported as fraudulent. However, as part of the complaints process, Lloyds continued to use incorrect contact details for Mr D – which were provided on the application and most likely belonged to the fraudster. It wanted to speak with Mr D about the full circumstances of his complaint, but when it received no reply, it issued its final response to his complaint based on the information it already had available. As a result, the complaints handler didn’t have the full picture of what Mr D wanted to complain about, which meant not everything was addressed that he wanted it to. Mr D had already told the bank the application was fraudulent, and I see from its records that Mr D’s contact information was changed on the same day it was made. So I find Lloyds should’ve

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been aware of this and ensured it was using Mr D’s correct contact information. When Mr D discovered the bank had been using the fraudster’s contact information and therefore hadn’t understood his complaint in full, I accept this would’ve caused him trouble and upset. As such, I find it reasonable for Lloyds to pay £200 compensation to Mr D to reflect this. Overall, aside from the customer service issues as mentioned above, I don’t consider Lloyds did anything wrong when it declined to refund the transactions made by Mr D himself, or hold him responsible for the outstanding credit card balance. The information it’s recorded on his credit file is an accurate reflection of the account’s activity, and it’s entitled to pursue Mr D for repayment of the outstanding balance. But, I’d like to remind Lloyds of its responsibility to treat instances of financial difficulties positively and sympathetically when setting up a suitable repayment plan. Putting things right For the reasons mentioned above, I require Lloyds Bank PLC to: • Pay Mr D £200 compensation. My final decision My final decision is that I uphold this complaint in part. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr D to accept or reject my decision before 3 April 2026. Lorna Wall Ombudsman

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