December 16th 2024.
HSBC Australia, one of the largest banks in the world, is facing serious allegations of failing to protect its customers from scams. The Australian division of the bank is being sued by ASIC, the Australian Securities and Investments Commission, for not adequately safeguarding customers from losing millions of dollars to fraudulent activities. This is a landmark case, as it is the first time ASIC has taken legal action against a bank for these types of failures.
According to ASIC deputy chair Sarah Court, the allegations against HSBC are not limited to a few isolated incidents, but rather a widespread and systemic issue. Court stated that this is the first case of its kind not only in Australia, but also globally. The corporate watchdog claims that HSBC Australia did not have sufficient measures in place to prevent and detect unauthorized transactions, as well as failing to properly investigate and resolve customer reports of fraudulent payments.
Reports of scams targeting HSBC Australia customers began to increase in 2023, as scammers found ways to access accounts by posing as bank staff. Between January 2020 and August 2024, there were 950 reports of unauthorized transactions, resulting in around $23 million in losses for customers. The majority of these losses, approximately $16 million, occurred between October 2023 and March 2024.
Court revealed that many of these scams were carried out through text messages or emails, and that the bank failed to protect its customers from falling victim to these fraudulent activities. She also noted that HSBC Australia took an average of 95 days to restore customer access to their accounts, with one customer having to wait 542 days to regain access.
ASIC claims that HSBC Australia did not fulfill its obligations under the Corporations Act and the National Consumer Credit Protection Act by not taking necessary action to prevent these scams from occurring. Court emphasized the severity of these types of fraud, stating that customers can lose their life savings in an instant, and that scammers do not discriminate.
HSBC Australia responded to the allegations by stating that they are committed to protecting their customers from scammers and are currently reviewing the matters raised by ASIC. They also stated that they have invested significantly in fraud prevention, detection, and response measures. It is yet to be determined what penalties HSBC may face if found guilty.
In the meantime, Court urged all banks to take responsibility and join the fight against scams, as scammers are constantly finding new ways to exploit people. She stated that ASIC will not hesitate to take legal action against banks that fail to comply with their obligations to protect their customers. As the case against HSBC Australia progresses, it is a reminder for all banks to prioritize the safety and security of their customers.
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