Lloyds Bank PLC · DRN-6236447

The complaint Mr H complains that Lloyds Bank PLC won’t refund money he lost after falling victim to a scam. Mr H is professionally represented, however, to keep things simple, I’ll refer to Mr H throughout my decision. What happened In summary, Mr H met an individual, I will refer to as ‘X’, on a dating app in 2025. They began talking via a messaging service in June and they spoke regularly via messages and phone calls until the end of July 2025, based on the conversations we’ve been provided. As part of the scam, Mr H was persuaded by X to send just under £30,000 across fifteen transactions via a genuine crypto exchange provider between 9 June 2025 and 28 July 2025. When Mr H realised he had been scammed, he logged a complaint with Lloyds. Lloyds looked into the complaint and upheld it in part. Lloyds found it should have intervened when Mr H made a payment of £4,170 on 28 July 2025, and they agreed to refund the payments he made from this point onwards, with an 8% interest payment and a further £100 for the distress and inconvenience caused. Lloyds reduced the partial refund they provided by 50%, as they felt Mr H should have done more to protect himself from the scam. Lloyds didn’t agree to refund the earlier payments Mr H made, as they said they were in-line with his normal account activity and didn’t raise any concerns which warranted intervention. Mr H didn’t agree with the outcome reached by Lloyds, so the complaint was raised to our service. Our Investigator looked into the complaint and didn’t agree with the outcome reached by Lloyds. In short she said, Lloyds should have intervened when Mr H made a payment of £4,000 to a known crypto exchange provider on 1 July 2025. The Investigator initially said, this should have resulted in Lloyds carrying out an intervention via a phone call, which she later changed to a written intervention. However, she still felt this was sufficient for Lloyds to uncover the scam. As a result, the Investigator, asked Lloyds to provide a partial refund from the payment Mr H carried out on 1 July 2025, with a 50% reduction, rather than from the point, Lloyds had already agreed to refund Mr H from. Mr H agreed with the outcome reached by the Investigator. Lloyds disagreed, and in summary they said, the earlier payments were not made in quick succession to indicate Mr H was falling victim to a scam. And they maintained the outcome they reached was correct, which was to provide a partial refund from the intervention point they had identified due to the rapid increase of the payments on 28 July 2025. I reviewed the complaint and wrote to Mr H to try to resolve the complaint informally. In summary, I agreed with the partial refund Lloyds had already provided, rather than the outcome our Investigator had reached. Even though I agree with the intervention point mentioned by the Investigator, based on the information provided, I didn’t agree a written

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intervention would have resulted in the scam being uncovered or Mr H’s loss being prevented, which I will elaborate on later. Mr H disagreed, and said the initial outcome issued by our Investigator was correct, which mentioned human intervention via a phone call should have taken place on the £4,000 payment he made on 1 July 2025, which he said would have resulted in the scam being uncovered and his loss being prevented from that payment onwards. As no agreement could be reached, Mr H asked for a final 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. I’m sorry Mr H has been the victim of a scam. But while I appreciate this has had a significant impact on him, I think Lloyds has acted fairly by refunding the amount they have, and I wouldn’t be asking them to do anything else. My first consideration is in relation to the CRM code which can offer a potential means of obtaining a refund following scams like this one. And, while Lloyds has signed up to the CRM code, the payments unfortunately aren’t covered under it. This is because the CRM code doesn’t cover payments made to an account held in a person’s own name – which is what happened here. So, I can’t fairly direct Lloyds to refund payments under the CRM code if they’re not covered by it. I’ve therefore considered whether Lloyds should reimburse Mr H under any of their other obligations. In broad terms, the starting position in law is that a bank is expected to process payments that their customer authorises them to make. Here, it isn’t disputed that Mr H knowingly made the payments and so, I’m satisfied he authorised them. Therefore, under the Payment Services Regulations 2017 and the terms of the account, Lloyds are expected to process Mr H’s payments, 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. Here, Lloyds has already accepted they could’ve done more to protect Mr H from the scam. Because of this, they decided to refund 50% of his loss – from the payment he made on 28 July 2024 for £4,170 onwards. As a result, I will focus on whether Lloyds should have intervened on the earlier payments he made from his Lloyds account to the crypto exchange provider, and if any intervention would have made a difference, and whether it is fair and reasonable for the amount refunded to Mr H to be reduced by 50% due to contributory negligence on his part. I appreciate that there were sophisticated aspects to this scam, however having looked at the earlier transactions Mr H made prior to the partial refund, I think Lloyds should have intervened on the payment Mr H made on 1 July 2025 for £4,000, which was going to a known crypto exchange provider. Lloyds should have established if the payment he was making were being made for legitimate reasons or not. Lloyds should also have been aware of the risks associated with cryptocurrency payments at the time the payment was made and as firms were required to provide a higher standard of care to their customers under the Financial Conduct Authority (FCA) Consumer Duty, Lloyds needed to take additional steps or provide additional warning before processing this payment. As a result, when the payment

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was made Lloyds should have asked Mr H a series of questions about the payment he was making in an attempt to narrow down the specific risk. Once the risk had been identified, Lloyds should have provided a warning which covered off the key features of the scam risk identified. And as Lloyds knew or ought to have known that the payment was going to a cryptocurrency provider, it ought to have factored this into the questions it asked. I appreciate Mr H has said Lloyds should have called him when he made the above payment, which would have uncovered the scam. However, I don’t agree the payment was large enough to warrant Lloyds to call Mr H, and I’m satisfied a written warning was sufficient. In my opinion, even if Lloyds had reached out and provided a written intervention to establish the circumstances of the payment he was making, I’m not persuaded they would have uncovered the scam. I will explain why. For me to find it fair and reasonable that Lloyds should refund Mr H requires more than a finding that Lloyds ought to have intervened or done more, but crucially I’d need to find that but for this failure the subsequent loss would’ve been avoided. That latter element concerns causation. A proportionate intervention will not always result in the prevention of a payment. And if I find it more likely than not that such a proportionate intervention by Lloyds wouldn’t have revealed the payments were part of a fraud or scam, then I couldn’t fairly hold them liable for not having prevented them from being made. Having reviewed all the information provided including the messages between Mr H and X, and without going into too much detail it is clear Mr H had built up a strong relationship with X prior to making the payments. Based on the information provided, I think it is clear when Mr H was making the payments he was being guided and coached by X. And even when Mr H realised he might have been scammed, he confided in X, as he still didn’t suspect X was involved in the scam and felt X was trying to help him recover his funds by offering to give him some of her funds, which he refused to accept. Mr H was convinced X was genuine and he thought they were both going to have a future together, which was evident by him refusing to take any money from her to cover the fees he was being told to pay to make any withdrawals. This is evident from a message he sent X on 29 July 2025, which said: “I am so thankful for your help but I can do this task on my own” and “I have waited so long for you. This shows how I feel for you.” Also, after making all the payments, Mr H still didn’t realise X was part of the scam and he was convinced he would be spending his future with X as he was asking her, what time her flight was, so he could plan his day to make sure he can pick her up. Based on the information provided, I don’t think an earlier intervention in the form of a written warning from Lloyds as mentioned above would have been enough to convince Mr H he was the victim of a scam or stopped him from making any further payments when he attempted to make the payment of £4,000 on 1 July 2025. As a result, I don’t agree a written warning from Lloyds would’ve uncovered the scam and prevented Mr H’s losses from the earlier intervention point mentioned. I now turn to the refund Lloyds have already provided. When considering whether a consumer has contributed to their own loss, I must consider whether their actions showed a lack of care that goes beyond what we would expect from a reasonable person. I must also be satisfied that the lack of care directly contributed to the individual’s losses. I’ve concluded, on balance, that it would be fair to reduce the amount Lloyds pays Mr H because of his role in what happened. Based on the information provided, I think he reasonably ought to have conducted further checks on the information he was provided by X prior to making the investment. Mr H has mentioned he did search the company online and found no reasons for concern. However, he was recommended to the investment opportunity from someone he had met on a dating website which carried a higher level of risk. Mr H

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didn’t receive any official documentation or any terms and conditions for the investment, which you would expect from a genuine investment firm. And considering the large amount of funds involved, I would have expected Mr H to have carried out independent due diligence aside from X before going ahead with the investment opportunity. So, I think a fair reduction is 50% in the refund already provided by Lloyds. I’ve also considered whether, on being alerted to the scam, if Lloyds could reasonably have done anything more to recover Mr H’s losses, but I don’t think they could. One of the options available to Lloyds was to raise chargebacks on the payments Mr H made against the payee - that being the crypto provider. But these likely wouldn’t have had any reasonable prospect for success. This is because, the service paid for was provided – that being the exchange of funds into crypto to Mr H’s own account. So, I wouldn’t have expected Lloyds to have done anything else to help recover Mr H’s funds. I have a great deal of sympathy for Mr H and the loss he’s suffered. But whilst I haven’t made this decision lightly, I don’t think Lloyds need to provide him with any further refund. My final decision My final decision is I do not uphold this complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr H to accept or reject my decision before 27 April 2026. Israr Ahmed Ombudsman

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