Updated ,first published
After years of blaming devastated scam victims, global banking giant HSBC has suddenly changed course and will no longer fight claims its widespread and systemic failures allowed criminals to fleece its Australian customers of tens of millions of dollars.
Australia’s corporate regulator sued the local subsidiary of one of the world’s largest financial institutions for failing to introduce adequate scam protections, even in the face of repeated warnings from its own fraud experts over many years.
HSBC’s Australian customers lost more than $100 million to scams from 2021 to 2024, according to court documents. Many were victims of a sophisticated bank impersonation scam, where criminals imitated HSBC bank employees and sent text messages that appeared to come from HSBC.
The bank has consistently denied it did anything wrong, instead often presenting scam victims with the findings of “fraud investigations” that, rather than investigating the crime, outlined why the customer was solely to blame for the losses.
This week, less than two months before the scheduled trial date, HSBC said it would no longer defend the case brought by the Australian Securities and Investments Commission. The 12-day trial planned for mid-June has been cancelled, and replaced by a one-day hearing the same month.
On Wednesday, the regulator and bank wouldn’t comment on any proposed settlement. However, scam victims and advocates said they hoped the penalty for HSBC would send a clear message to the industry “to lift their game”.
They called for full financial compensation for HSBC scam victims (including those they say were previously pressured into accepting “low-ball” settlements), recompense for the bank’s combative approach with customers, and a significant further penalty.
“It was quite extraordinarily awful behaviour by HSBC,” said Stephanie Tonkin, chief executive of the Consumer Action Law Centre.
“We routinely see … big businesses telling individual scam victims who’ve lost everything that it’s their fault, and that there’s nothing that the business should or could have done.
“We know from this HSBC case there’s a long list of routine things they could have implemented to protect their customers.”
An investigation by this masthead into HSBC’s handling of a long-running impersonation scam found that the bank had failed to pick up red flags of fraud, including overseas logins made on accounts mere minutes after the customer had logged in from Melbourne and other Australian cities.
Court documents since filed by ASIC indicate that HSBC knew its customers were being scammed because of the bank’s own security shortcomings.
They show that, in January 2022, a meeting of an HSBC fraud steering committee was told losses from scam cases “would likely have been avoided with BioCatch/Threatmetrix implementation for transactional monitoring”.
More than a year after this internal warning, HSBC customer Katrina Qian lost almost $50,000 to scammers. Qian was still learning how to speak English and was spooked by the scammer who called her pretending to be a government official.
No alarm bells were raised at the bank when the criminals who targeted her were able to exchange tens of thousands of dollars of Qian’s money into British pounds, and then send that money to an overseas recipient.
Qian is still $37,500 out of pocket. HSBC paid $9500 “as a gesture of goodwill”, but said their investigations had determined that Qian was liable for her losses because “on the balance of probabilities” she had shared passcodes with a third party.
Reflecting on the impact of the saga, Qian said she was still fighting for compensation, and would never recommend HSBC to anyone. “I always feel nervous and afraid of consistent privacy attack.”
On Wednesday, HSBC would not say whether it would provide direct compensation or an apology to affected customers. “HSBC and ASIC are working to resolve the legal proceedings in relation to frauds and scams,” a spokesperson said.
A similar statement was issued by ASIC. “The parties have been working toward an agreed outcome in this matter,” an ASIC spokesperson said. “The ultimate outcome will be a matter for the judge.”
ASIC had been pushing for HSBC to be penalised with fines and adverse publicity orders.
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Disclaimer : This story is auto aggregated by a computer programme and has not been created or edited by DOWNTHENEWS. Publisher: www.smh.com.au
