Lloyds Bank PLC · DRN-6239387

The complaint Mr and Mrs C are being represented by a claims manager. They’re complaining about Lloyds Bank PLC because it declined to refund money they lost as a result of fraud. While this complaint relates to a joint account, the payments were made by Mr C and he was the direct victim of the scam so I’ll refer to him only in the remainder of this decision. What happened Sadly, Mr C fell victim to a cruel job scam after he was contacted online and offered work that required him to review websites. He was required to pay to access work tasks using cryptocurrency and, in August 2025, he made the following payments from his Lloyds account to two different cryptocurrency exchanges: No. Date Amount £ Method 1 13 Aug 1,000 Transfer 2 13 Aug 50 Transfer 3 13 Aug 100 Transfer 4 13 Aug 500 Transfer 5 13 Aug 9,969.72 Transfer 6 13 Aug 300 Transfer 7 14 Aug 10,000 Transfer 8 14 Aug 10,000 Transfer 9 14 Aug 5,000 Transfer 10 14 Aug 1,000 Card 11 14 Aug 3,000 Card 12 15 Aug 2,605.58 Transfer 13 15 Aug 7,569.78 Transfer 14 22 Aug 3,799.86 Transfer 15 22 Aug 1,515.13 Transfer Our investigator didn’t recommend the complaint be upheld. They noted that Lloyds spoke to Mr C on two occasions about the payments he was making but that he didn’t provide accurate information about their purpose and felt this prevented the bank from uncovering the scam. Mr C didn’t accept the investigator’s assessment and his representative made the following key points: • Lloyds would have been expected to use its knowledge of different types of scams to ask appropriate open and probing questions about the payments. • The bank’s interventions weren’t effective as Mr C’s answers weren’t properly scrutinised despite several red flags its agents should have identified. For example, when he said he was only putting money into cryptocurrency and not taking it out and that this was a sideline for him, which wasn’t consistent with the size of the payments

-- 1 of 5 --

being made. One of the agent’s also identified that the amounts he was discussing would take Mr C’s account into its overdraft. • Lloyds and its agents failed to provide warnings about job scams despite the pattern of payments being consistent with this type of fraud. • The bank failed in its responsibility under the Financial Conduct Authority’s Consumer Duty to protect Mr C from foreseeable harm. The complaint has now been referred to me for review. 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’ve reached the same overall conclusions as the investigator. Mr C’s representative has made extensive submissions in support of his complaint but I haven’t necessarily commented on every single point raised. I’ve concentrated instead on the issues I believe are central to the outcome of the complaint. This is consistent with our established role as an informal alternative to the courts. In considering this complaint I’ve had regard to the relevant law and regulations; any regulator’s rules, guidance and standards, codes of practice, and what I consider was good industry practice at the time. There’s no dispute that Mr C authorised these payments. In broad terms, the starting position at law is that a bank is expected to process payments a customer authorises it to make, in accordance with the Payment Services Regulations and the terms and conditions of their account. In this context, ‘authorised’ essentially means the customer gave the business an instruction to make a payment from their account. In other words, they knew that money was leaving their account, irrespective of where that money actually went. There are, however, some situations where we believe a business, taking into account relevant rules, codes and best practice standards, shouldn’t have taken its customer’s authorisation instruction at ‘face value’ – or should have looked at the wider circumstances surrounding the transaction before making the payment. Lloyds also has a duty to exercise reasonable skill and care, pay due regard to the interests of its customers and to follow good industry practice to keep customers’ accounts safe. This includes identifying vulnerable consumers who may be particularly susceptible to scams and looking out for payments which might indicate the consumer is at risk of financial harm. Taking these things into account, I need to decide whether Lloyds acted fairly and reasonably in its dealings with Mr C. The payments I must take into account that many similar payment instructions Lloyds receives will be entirely legitimate. I also need to consider its responsibility to make payments promptly. At the same time, Lloyds knew the payments were going to cryptocurrency and that this meant they carried a greater risk of being associated with fraud. Having considered what Lloyds knew about payments 1 to 4 at the time it received the payment instruction, I’m not persuaded it ought to have been concerned. In particular, I’m conscious the amounts involved were low and also that statements show Mr C had made a number of previous payments to cryptocurrency from the account – I counted 17 payments

-- 2 of 5 --

between December 2024 and August 2025 – and that no issues had been reported. In the circumstances, I don’t think there were sufficient grounds for Lloyds to suspect Mr C was at risk of financial harm from fraud when he made payments 1 to 4 and I can’t reasonably say it was at fault for processing them in line with his instructions. However, payment 5 was for a much larger amount than Mr C had paid to cryptocurrency previously and was his fifth payment on that day. In my view this is the point at which a pattern of multiple, rapid and increasing payments seen in many known scams began to emerge and when Lloyds should have identified he may be at risk of harm from fraud. Having thought carefully about the risks this payment presented, I think a proportionate response would have been for Lloyds to find out more about the circumstances of the payment, most likely by speaking to him on the telephone, and then providing tailored scam warnings based on the information he provided. Lloyds didn’t intervene as I’ve described before processing payment 5, but it did speak to him twice on 14 August (the following day) when he tried to make further payments to one of the cryptocurrency exchanges. Lloyds has provided recordings of the calls, which have been shared with Mr C’s representative, and I think these are indicative of how a similar intervention would have turned out if Lloyds had intervened in the same way before payment 5 was completed. During the first call, the agent asked Mr C a number of questions about the payment he’d tried to make and a number of his answers weren’t accurate. In particular, he said: • the purpose of the payment was to invest in cryptocurrency, a sideline he’d become more and more involved with over time. He made no mention of the payment being related to a job opportunity; • he was only paying money in (not withdrawing funds) as this was ‘a buy and hold situation’ for him at the time. Again, making no mention of the fact that he expected to receive payment for the work he was completing; and • the recent large payment into the account was from a friend who was repaying money he’d borrowed from Mr C previously. In contrast, Mr C’s representative has told us that this was money he actually borrowed from his friend to pay to the scam. The second call was shorter as the agent read back Mr C’s previous answers to check them. This gave him another opportunity to explain what the payment was really for but he simply confirmed the earlier answers were correct. Based on the answers given, I think the bank’s agents were reasonably entitled to believe Mr C was making legitimate cryptocurrency investments in his own name that were largely funded by money he’d received from a friend to repay a previous loan. In view of his previous history of payments to cryptocurrency, I think that explanation would have seemed plausible. On balance, I think the agents should have concluded that if a scam was taking place, it was most likely a cryptocurrency investment scam and I would have expected them to provide tailored warnings setting out common features of this type of scam. That doesn’t appear to have happened but I don’t think that’s crucial on this occasion. Mr C wasn’t involved in this type of scam so I wouldn’t have expected warnings about investment scams to have resonated with him or opened his eyes to what was really going on. Based on the information available to the bank’s agents, I wouldn’t have expected them to identify the payments may be part of a job scam or to provide warnings about this type of fraud.

-- 3 of 5 --

The success of any fraud intervention by a bank depends to some extent on the customer providing accurate information about the purpose of the payments and the surrounding circumstances. In this case Mr C didn’t provide accurate information. I appreciate that he answered the agent’s questions as he did on the advice of the scammers, but I think it’s clear that this only hampered the bank’s efforts to protect his money. Further, I’ve no reason to believe that Mr C would have been any more open about the purpose of the later payments if he’d been asked about those or that a later intervention would have been more successful. I want to be clear that it’s not my intention to suggest Mr C is to blame for what happened in any way. He fell victim to a sophisticated scam that was carefully designed to deceive and manipulate its victims. I can understand why he acted in the way he did. But my role is to consider the actions of Lloyds and, having done so, I’m not persuaded these were the cause of his losses. I’ve also noted the comments of Mr C’s representative about the FCA’s Consumer Duty and I’ve taken account of the bank’s obligations following its introduction, but I’m not persuaded this changes the outcome here. While Lloyds was expected to avoid causing him foreseeable harm, I’m not persuaded its actions were the cause of the harm he suffered, nor do I think that harm was reasonably foreseeable given the information available to it at the time. Recovery of funds Mr C isn’t due any refund under the industry’s reimbursement scheme for authorised push payment (APP) fraud as the transfers went to another account in his own name and the card payments aren’t covered by the scheme. Mr C transferred funds to legitimate cryptocurrency accounts in his own name, from where he purchased cryptocurrency and moved it to a wallet address of his choosing (albeit on the scammers’ instructions). Lloyds could only try to recover funds from his own account and it appears all the money had already been moved on. If not, anything that was left would still have been available to him to access. I’ve considered whether Lloyds should have tried to recover the card payments through the chargeback scheme. 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 recipient of the payment can defend a chargeback if it doesn’t agree with the request. I’d only have expected Lloyds to raise a chargeback claim if it was likely to be successful and it doesn’t appear that would have been the case here. Mr C paid legitimate cryptocurrency exchanges and received the requested service of changing his money into cryptocurrency before sending it to the wallet address he supplied it with. his disagreement is with the scammers, not the cryptocurrency exchanges, and it wouldn’t have been possible for the bank to process a chargeback claim against the scammers as he didn’t pay them directly. In the circumstances, I don’t think anything that Lloyds could have done differently would likely have led to these payments being successfully recovered. In conclusion I recognise Mr C has been the victim of a cruel scam and I’m sorry he lost this money. I realise the outcome of this complaint will come as a great disappointment but, for the

-- 4 of 5 --

reasons I’ve explained, I don’t think any further intervention by Lloyds would have made a difference to the eventual outcome and I won’t be telling it to make any refund. My final decision My final decision is that I do not uphold this complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Mrs C and X to accept or reject my decision before 21 April 2026. James Biles Ombudsman

-- 5 of 5 --