HSBC Bank Australia is facing legal action from the Australian Securities and Investments Commission (ASIC) over its failure to safeguard customers from online scams, leading to losses totaling A$23 million (US$14.65 million). The lawsuit, filed in the Australian federal court on Monday, relates to 950 separate reports of unauthorized transactions spanning from January 2020 to August 2024.
The scam-related complaints have surged in recent years, with nearly 70% of the total losses—around A$16 million—occurring in the six-month period between October 2023 and March 2024. ASIC’s claim highlights HSBC’s inability to prevent and detect fraudulent transactions, as well as its failure to address customer concerns in a timely manner.
According to the regulator, HSBC failed to meet its legal obligation to investigate unauthorized payments promptly. In some cases, the bank took as long as 145 days to investigate reports, and it took up to 95 days to unlock customers’ accounts. In one instance, a customer was forced to wait 542 days to regain access to their account. Australian banking regulations stipulate that investigations into unauthorized transactions should be completed within 21 days, or 45 days in exceptional circumstances.
ASIC’s Deputy Chair, Sarah Court, described the bank’s failures as “widespread and systematic” across the industry. She emphasized that the case serves as a reminder to all financial institutions of their responsibility to protect customers from fraud. “All banks need to pull their weight in the fight against scams,” Court said, adding that ASIC would not hesitate to take legal action when banks fail to comply with their obligations.
This is the first instance where ASIC has taken a financial institution to court over such widespread customer complaints. The regulator is seeking “significant penalties” from HSBC, with hopes that the case will send a strong message to both the bank and the broader financial sector.
In response, HSBC acknowledged the claim and expressed its commitment to addressing the issues raised by ASIC. An HSBC spokesperson said, “Protecting our customers from scammers remains our top priority,” and reiterated that the bank continues to invest in fraud prevention and detection measures.
The lawsuit comes amid a rise in scam-related activity, with fraudsters increasingly using sophisticated methods such as “spoofing”—sending text messages and phone calls that appear to come from legitimate sources, like HSBC. These scams have contributed to a significant increase in financial losses, with Australian consumers losing approximately A$2.74 billion to fraudsters in 2023 alone.
The trend of rising scams is not limited to Australia. Hong Kong has also seen a surge in fraud cases, with a 16% rise in complaints related to Authorized Push Payment (APP) fraud in the first half of 2024. In response, Hong Kong’s authorities are considering measures to allow banks to share losses with customers affected by fraudulent transactions. Similarly, Singapore’s government has proposed legislation to enable police to freeze bank accounts of individuals believed to have fallen victim to scams, further highlighting the global concern over rising online fraud.
ASIC’s action against HSBC underscores the urgent need for financial institutions to strengthen their fraud prevention systems as online scams continue to escalate worldwide.
Related Topics:
Shipping Finance Nears Net Zero Alignment, Reports Poseidon Principles
South Korea to Strengthen Market Stabilization Measures Amid Political Uncertainty
Stock Market Rally Slows as Nasdaq Retreats from Record Highs
