Not upheld: merchant error - pre-authorisation complaint against HSBC UK Bank Plc

Decision detail

Summary

Mr S complained to HSBC after a bike rental transaction in the USA resulted in a pre-authorisation of just over £12,000 instead of the expected £7.91. HSBC explained the error was the merchant's responsibility and that a 30-day billing cycle applied to pre-authorised Mastercard transactions. The correct amount was eventually debited after the pre-authorisation dropped off. Mr S sought £100 compensation for stress and claimed the pending transaction prevented him from paying suppliers. The ombudsman did not uphold the complaint, finding HSBC was not at fault for the merchant's error and therefore not liable for compensation.

The Ombudsman's reasoning

The ombudsman determined that while the pre-authorisation was inconvenient and caused Mr S stress, HSBC was not at fault. The error originated from the merchant's request for pre-authorisation, which is a standard practice to protect merchant funds. HSBC did not make an error and therefore cannot be held responsible for the consequences, including any claimed reputational damage to Mr S's business relationships, which was not evidenced.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website