Not upheld: scam and fraud claim complaint against HSBC UK Bank Plc

Decision detail

Summary

Mr M complained that HSBC should refund over £7,000 he lost when he made payments to what he believed was a genuine business opportunity entered into by his spouse. HSBC treated the matter as a civil dispute rather than a scam. The ombudsman investigated and determined that the payments were made to a legitimate multi-level marketing (MLM) company, not a fraudulent scheme, and that products were received or partially refunded. Since no scam was proven and the company was operating lawfully, the ombudsman found that HSBC's obligations to protect against fraud did not apply. The complaint was not upheld and no reimbursement was ordered.

The Ombudsman's reasoning

The ombudsman applied the Payment Services Regulations 2017, which establish that consumers are generally liable for authorised payments and firms have obligations to protect against fraud and scams only when fraud or a scam is actually present. The key finding was that the company operated as a legitimate MLM business, not a fraudulent scheme. The fact that products were received or partially refunded further supported that no scam occurred. Without conclusive evidence of a scam, the ombudsman could not require HSBC to reimburse the payments. Additionally, even if a scam could be proven, there were no warnings available at the time that would have prompted HSBC to intervene.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website