In Groundbreaking Banking & Finance Case, HSBC Sued Over $23 Million Scam

HSBC faces landmark banking case as ASIC sues the bank over a $23m scam, alleging it failed to protect 950 customers from a spoofing scam.

The Australian Securities and Investments Commission have instituted a lawsuit against HSBC for not protecting 950 customers from a $23 million scam. The entire case revolves around a long-term "spoofing" scam whereby in a first in the banking and finance sector, ASIC has pursued the lawsuit against a financial institution for widespread failings to address customer complaints.

Fraudulent software was then used to masquerade as HSBC's phone number in order to log in to customer accounts, thus cybercriminals disguising their identity as the bank and manipulating victims into giving out personal information under the guise of fraud prevention, with some victims 'losing up to $90,000.

The Deputy Chair of ASIC, Sarah Court, painted a picture of the bank's response as "widespread and systemic," making mention of failure to act on customer reports as also failure to take timely measures to conduct investigations. While banks are not obliged by law to do away with scams, they are mandated to have their customer's personal information safeguarded through several industry codes.

The lawsuit sends a rather strong signal to the banking and finance industry on the importance of safekeeping clients' funds and data. Consumer advocacy groups have backed the case as well, underscoring the need for fast redress and stiffer fraud protections.

HSBC has already revamped security in an attempt to resolve cases with AFCA and prevent further scams. Its effects, though, remain one of the longest-hanging threats against public trust in the banking and financial institution.