Not upheld: scam - unauthorised payment / failure to recover funds complaint against HSBC UK Bank Plc

Decision detail

Summary

Mr M complained that HSBC should refund money he lost to a scam after making a payment via his debit card through PayPal to a fraudulent website. He believed he was paying £50 but was charged £500 in a foreign currency and received no goods. HSBC attempted a chargeback against PayPal which failed, and the temporary refund was reversed. The ombudsman found HSBC not liable because the payment was properly authorised and authenticated by Mr M, was not suspicious enough to warrant intervention, and the chargeback against PayPal was not viable as PayPal had provided the payment service correctly. The ombudsman concluded that while the scammer was responsible for the fraud, HSBC had done nothing wrong and could not fairly be held responsible for the loss.

The Ombudsman's reasoning

The ombudsman found that while Mr M fell victim to a scam, HSBC did not cause the loss and cannot be held liable. The payment was properly authorised and authenticated by Mr M, and under the Payment Services Regulations and account terms, Mr M is liable for authorised payments in the first instance. HSBC had no pressing reason to intervene as the payment was not suspicious - it was a single payment of reasonable size to an established payment service. The chargeback against PayPal was not viable because PayPal provided the payment service correctly and was not responsible for providing the goods. HSBC could not have stopped the payment after Mr M reported it as it had already been processed.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website