Consumer complaint received 2022-06-13
Product: Checking or savings account — Other banking product or service
Issue: Managing an account — Deposits and withdrawals
Company: HSBC NORTH AMERICA HOLDINGS INC. (NY)

A third-party called and pretended to be a representative from HSBC and tricked us into providing account login information and account confirmation code, to initiate an XXXX  out of the our account. When this was identified as a fraud on XX/XX/XXXX within 10-15 minutes we contacted HSBC which was well within the standard 2 business days that is generally required to highlight this as an unauthorized transaction to a " XXXX XXXX '' and requested that the funds be recalled and that the receiving bank ( XXXX XXXX XXXX ) be advised to immediately freeze the funds. 

The Premier Relationship XXXX confirmed to us later on XX/XX/XXXX, that the funds had been suspended by XXXX XXXX XXXX as requested by HSBC and that we should expect to receive our {$20000.00} back in 10 working days.

This did not happen and we have been contacting HSBC regularly and to date we have not received our funds and after two formal complaints we are advised that we are not entitled to a refund as there was not errors identified and the funds could not be recouped from XXXX XXXX XXXX. 

The lack of detail and sufficient explanation that we have been provided after over XXXX months makes it unclear what steps were undertaken on our behalf to promptly investigate the fraud as soon as it was originally raised and what information was used to reach the current conclusions. We requested additional information on the full details of the investigation and how the current unsatisfactory conclusion was determined but to date this has not been received. 

Furthermore, there is no reference made to the protections which we should be afforded as consumers under Regulation E : Electronic Fund Transfers 12 CFR 205 and the requirement of HSBCs obligations as a financial institution to comply with the Electronic Funds Transfer Act 1978 ( EFTA ) and Regulation E, to correct the error and initiate a refund to our account.

The below was specifically highlighted in our compliant referencing the Consumer Financial Protection Bureau ( CFPB ) FAQs dated of XX/XX/XXXX in this regard : Coverage : Transactions The term electronic fund transfer or XXXX means any transfer of funds that is initiated through an electronic terminal, telephone, computer, or magnetic tape for the purpose of ordering, instructing, or authorizing a financial institution to debit or credit a consumer 's account. 12 CFR 1005.3 ( b ) ( 1 ).

Accordingly, Regulation E applies to any person-to-person ( P2P ) or mobile payment transactions that meet the definition of XXXX, including debit card, ACH, prepaid account, and other electronic transfers to or from a consumer account.

12 CFR 1005.3 ( b ) ( 1 ) ( v ) ; Comment 3 ( b ) ( 1 ) -1.ii.

Coverage : Financial Institutions Regulation E section 1005.2 ( i ) defines financial institution under XXXX and Regulation E to include banks, savings associations, credit unions, and : any other person that directly or indirectly holds an account belonging to a consumer, or any other person that issues an access device and agrees with a consumer to provide electronic fund transfer ( EFT ) services. 
12 CFR 1005.2 ( i ).

Financial institutions include providers of P2P payment and bill payment services, if they directly or indirectly hold an account belonging to a consumer, or if they issue an access device and agree with a consumer to provide XXXX services. 
Any entity that is considered a financial institution under Regulation E has error resolution obligations in the event that a consumer notifies the financial institution of an error, with limited exceptions. 12 CFR 1005.11.

Error Resolution : Unauthorized EFTs An unauthorized XXXX is an XXXX from a consumers account initiated by a person other than the consumer without actual authority to initiate the transfer and from which the consumer receives no benefit. 

12 CFR 1005.2 ( m ).

A third party fraudulently induces a consumer into sharing account access information that is used to initiate an XXXX from the consumers account. Does this transfer fall within the Regulation E definition of an unauthorized transaction?

Yes.For example, the Bureau is aware of the following situations where a third party has fraudulently obtained a consumers account access information, and thus, are considered unauthorized EFTs under Regulation E : ( 1 ) a third-party calling the consumer and pretending to be a representative from the consumers financial institution and then tricking the consumer into providing their account login information, texted account confirmation code, debit card number, or other information that could be used to initiate an XXXX  out of the consumers account.. XXXX stemming from these situations meet the Regulation E definition of unauthorized XXXX. 

As the transaction in question falls within the Regulation E definition because the the information to action the transfer was obtained via fraud, taking this into consideration together with our additional items raised above, we requested that HSBC correct this error immediately and initiate a refund to our account for the unauthorized transfer of {$20000.00}. 

After escalation our claim has been rejected again and we are now being advised to refer this to local law enforcement as HSBC can no longer do anything. This is very shocking as when this was initially raised we were advised that as part of HSBC 's process that they would contact all the relevant authorities and we were not required to do anything directly.