Not upheld: scam/fraud - refusal to refund complaint against HSBC UK Bank Plc

Decision detail

Summary

Mr D lost money to a sophisticated scam where a fraudster impersonated a legitimate travel agent, convincing him to provide credit card details and one-time passcodes on multiple occasions. All disputed payments were authorised through strong customer authentication in-app with clear confirmation screens. The ombudsman found HSBC not liable because the payments were authorised under the Payment Services Regulations 2017, the transactions did not appear suspicious relative to Mr D's normal spending, and HSBC had no obligation to prevent the fraud. Alternative recovery routes through chargeback and section 75 of the Consumer Credit Act were deemed unlikely to succeed. HSBC was reminded to treat Mr D sympathetically regarding his outstanding balance given his financial difficulties.

The Ombudsman's reasoning

Under the Payment Services Regulations 2017, a payment is authorised when a customer consents to it, regardless of whether they fully understand the context. Mr D provided his card details and confirmed payments through strong customer authentication with clear on-screen prompts, constituting authorisation. HSBC was entitled to rely on these steps as representation of consent. The payments did not appear particularly concerning in terms of value relative to Mr D's usual spending, were made to legitimate merchants, and used different payment methods, so HSBC had no obligation to carry out additional fraud prevention checks. Chargeback and section 75 claims were unlikely to succeed as the merchants likely provided their goods/services and there was no valid debtor-creditor-supplier agreement.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website