Not upheld: Fraud reimbursement (APP scams) complaint against HSBC UK Bank Plc

Decision detail

Summary

Mr E complained that HSBC failed to reimburse funds he lost to two separate scams involving cryptocurrency purchases. In Scam 1 (February-April 2024), Mr E was targeted by a fake recovery service and made multiple cryptocurrency payments after being coached by scammers to provide false information to HSBC. In Scam 2 (August-December 2024), Mr E made further cryptocurrency payments to a fraudulent investment scheme. The ombudsman found that while HSBC should have intervened on the first Scam 2 payment, any warning would not have prevented the loss given Mr E's prior warning about investment scams, his determination to invest despite previous cryptocurrency scam victimization, and his willingness to follow scammer guidance to deceive the bank. The complaint was not upheld and no reimbursement was ordered.

The Ombudsman's reasoning

HSBC should take steps to identify and prevent sufficiently unusual or uncharacteristic payments. For Scam 1, although HSBC intervened, Mr E provided inaccurate information under scammer coaching and would likely have continued to do so if questioned further, so HSBC could not have uncovered the scam. For Scam 2, while the first £4,000 payment warranted intervention and a tailored warning, the ombudsman was not persuaded such a warning would have prevented the loss because: (1) Mr E had already received a similar warning in January 2024 which he acknowledged reading; (2) the circumstances of Scam 2 bore similar hallmarks to the warning; (3) Mr E was following scammer guidance to conceal the investment purpose; (4) Mr E had demonstrated understanding of FCA authorization requirements; (5) despite previous cryptocurrency scam experience and knowledge of risks, Mr E was determined to invest; and (6) HSBC had no visibility of Mr E's vulnerability. The payments went to Mr E's own cryptocurrency wallet before onward transmission, leaving no realistic recovery prospects.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website