Lloyds Bank PLC · DRN-6024407

The complaint Ms M complains Lloyds Bank PLC didn’t do enough to help get a refund for a payment made on her debit card. What happened In May 2025, Ms M booked a hotel stay paying with her Lloyds debit card. While staying at the hotel which I’ll call “F”, Ms M says she had no hot running water. Ms M says she tried to resolve the issue with F and the booking agent, and while she was eventually offered to move rooms, no refund was offered. Having not been able to resolve the matter with F, Ms M contacted Lloyds for help in getting a refund. Lloyds raised a chargeback, which is a process of asking F for a refund, via rules set by the card scheme, Visa in the circumstances of this case. F defended the chargeback, which is to say it didn’t agree a refund was due. Lloyds reviewed all the information it had been provided and didn’t think it could successfully pursue Ms M’s dispute further. It therefore closed the case in F’s favour and removed a temporary credit for the transaction amount it had applied to Ms M’s account. Unhappy with Lloyds, Ms M referred her concerns to the Financial Ombudsman Service. Lloyds then issued a response to Ms M’s complaint. It said that while it wasn’t wrong to close the chargeback when it did, it would reimburse £130.65 of the cost of the hotel and would pay £40 for the delay in responding to Ms M’s complaint. Ms M didn’t think the compensation fairly reflected the service she’d received. So, one of our Investigator’s looked into what happened. Overall, she concluded Lloyds’ response was fair, so didn’t recommend it do anything further. Ms M disagreed with our Investigator’s opinion. She said the chargeback did have a reasonable prospect of succeeding and Lloyds’ offer of compensation didn’t fairly reflect the inconvenience caused. As the matter wasn’t resolved, the complaint has been passed to me to decide. 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 want to acknowledge that I’ve summarised the events of the complaint. I don’t intend any discourtesy by this – it just reflects the informal nature of our service. I want to assure Ms M and Lloyds that I’ve reviewed everything on file, alongside taking into consideration the relevant rules and regulations applicable to this complaint. And if I don’t comment on something, it’s not because I haven’t considered it. It’s because I’ve concentrated on what I think are the key issues. Our powers allow me to do this.

-- 1 of 3 --

I’m looking here at the actions of Lloyds and whether it acted fairly and reasonably in the way it handled Ms M’s request for help in getting her money back. This will take into account the circumstances of the dispute and the card scheme rules, which Lloyds must follow and its own obligations. Ms M paid using her debit card. This meant the only realistic option available to Lloyds to get her money back was to engage with a process known as chargeback. The chargeback process provides a way for Lloyds to ask for a payment its customer made to be refunded. Where applicable, it raises a dispute with the merchant (F) and effectively asks for the payment to be returned to the customer. There are grounds or dispute conditions set by the relevant card scheme, and if these are not met, a chargeback is unlikely to succeed. The process provides an opportunity for F to provide a defence to the chargeback and its own evidence in support of that defence. If F continues to defend the chargeback, Lloyds can either accept that defence, or it can ask the card scheme to decide who gets to keep the money – usually referred to as arbitration. It isn’t a requirement that card issuers such as Lloyds must raise a chargeback every time its asked to. But where the evidence supports a chargeback in line with the scheme rules, I’d expect it to attempt a chargeback in support of its customer. Lloyds raised a chargeback on behalf of Ms M, so my decision focuses on whether Lloyds was reasonable in closing the dispute when it did. Having received Ms M’s dispute, Lloyds raised a chargeback under reason code “Not as Described or Defective Merchandise/Services”, which I find reasonable based on the circumstances of Ms M’s dispute. F defended the chargeback stating Ms M had stayed for the duration of her booking. While I appreciate Ms M strongly disagrees, I think Lloyds was reasonable in closing the dispute based on F’s defence. This is because against the chargeback rules, the dispute didn’t have a reasonable prospect of success. The above chargeback reason code sets out further requirements, for a chargeback to be successful. One of these, is that the dispute amount is limited to: “The unused portion of the cancelled service”. For hotel stays this is accepted as the nights not stayed having cancelled part of the booking. So, had Ms M cancelled her stay after the first night, due to the lack of hot water and chosen to stay elsewhere, it may have been possible to chargeback the remainder of the booking; on the basis the services weren’t as described – being no hot running water. However, Ms M stayed at F for the duration of her booking. I don’t want to diminish the frustration of not having hot water, as I’d equally be frustrated by this problem. However, as Ms M stayed for the duration of her booking, she had no prospect of achieving a full or partial refund via the chargeback process. I would note that Lloyds doesn’t set the chargeback rules, rather is required to simply consider a dispute against them. Therefore, I find Lloyds reasonable in closing Ms M’s dispute having received the defence from F.

-- 2 of 3 --

Lloyds provided a temporary credit for the disputed amount while the chargeback was open. As I find Lloyds was fair to close the dispute, I find it was also entitled to then remove this credit from Ms M’s account. When considering Ms M’s complaint, Lloyds decided to pay Ms M the equivalent of a two thirds refund of the cost of her booking alongside a further £40 compensation. Taking everything into consideration, I find this reasonable, so don’t find Lloyds must pay anything further. I say this as, for the reasons explained, I don’t think Ms M’s chargeback had a reasonable prospect of success, so had Lloyds not offered to reimburse part of the hotel cost and only offer compensation for the delay in responding to the complaint, I’d likely have concluded this was reasonable. As a result, I find Lloyds’ response to the complaint overall to be more than reasonable, so won’t be directing it to do anything further. My final decision For the reasons I’ve explained above, I don’t uphold this complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Ms M to accept or reject my decision before 16 April 2026. Christopher Convery Ombudsman

-- 3 of 3 --