HSBC Australia Sued by ASIC Over Scam Protection Failures
HSBC Australia is facing legal action from the Australian Securities and Investments Commission (ASIC) for allegedly failing to protect customers from scams, resulting in millions of dollars in losses. This landmark case is the first of its kind brought by ASIC, targeting the bank for widespread and systemic failures in fraud prevention.
ASIC Deputy Chair Sarah Court stated that the case against HSBC Australia is unprecedented, marking a global first in terms of such legal action. Court accused the bank of lacking adequate controls to prevent and detect unauthorized payments and of failing to act promptly on customer reports of fraud.
The corporate watchdog claims that from January 2020 to August 2024, HSBC Australia received 950 reports of unauthorized transactions, amounting to approximately $23 million in customer losses. Of that sum, around $16 million occurred between October 2023 and March 2024. Scammers primarily targeted customers via text messages and emails, with some victims losing up to $90,000 each.
Court emphasized that the bank had been aware of the risks of unauthorized transactions since at least January 2023 but failed to address gaps in its fraud detection systems. She also pointed out the bank’s delayed response in reinstating customer access to their accounts. On average, customers experienced a 95-day wait to regain access, with one customer left without access for 542 days.
ASIC alleges that HSBC Australia’s inaction violated several legal obligations under the Corporations Act and the National Consumer Credit Protection Act, leaving customers vulnerable to financial loss.
“We know scammers are constantly innovating, and customers can lose their life savings in an instant,” Court remarked, urging all banks to take responsibility in the fight against scams. While it is still unclear what financial penalties HSBC may face, Court made it clear that ASIC would not hesitate to take further legal action if necessary.
In response to the lawsuit, HSBC Australia stated that protecting customers from scams remains a priority and that the bank is fully cooperating with ASIC. A spokesperson added that HSBC continues to invest in fraud detection and prevention measures.