diff --git a/lightning/src/ln/onion_utils.rs b/lightning/src/ln/onion_utils.rs
index 6267e234a78..6c84584e963 100644
--- a/lightning/src/ln/onion_utils.rs
+++ b/lightning/src/ln/onion_utils.rs
@@ -1059,8 +1059,19 @@ where
 			Err(_) => {
 				log_warn!(logger, "Unreadable failure from {}", route_hop.pubkey);
 
+				let network_update = Some(NetworkUpdate::NodeFailure {
+					node_id: route_hop.pubkey,
+					is_permanent: true,
+				});
+				let short_channel_id = Some(route_hop.short_channel_id);
+				res = Some(FailureLearnings {
+					network_update,
+					short_channel_id,
+					payment_failed_permanently: is_from_final_node,
+					failed_within_blinded_path: false,
+				});
 				return;
-			}
+			},
 		};
 
 		let error_code_slice = match err_packet.failuremsg.get(0..2) {
@@ -2181,6 +2192,28 @@ mod tests {
 		assert_eq!(decrypted_failure.short_channel_id, None);
 	}
 
+	#[test]
+	fn test_unreadable_failure_packet_onion() {
+		// Create a failure packet with a valid hmac but unreadable failure message.
+		let onion_keys: Vec<OnionKeys> = build_test_onion_keys();
+		let shared_secret = onion_keys[0].shared_secret.as_ref();
+		let um = gen_um_from_shared_secret(&shared_secret);
+
+		// The failure message is a single 0 byte.
+		let mut packet = [0u8; 33];
+
+		let mut hmac = HmacEngine::<Sha256>::new(&um);
+		hmac.input(&packet[32..]);
+		let hmac = Hmac::from_engine(hmac).to_byte_array();
+		packet[..32].copy_from_slice(&hmac);
+
+		let packet = encrypt_failure_packet(shared_secret, &packet);
+
+		// For the unreadable failure, it is still expected that the failing channel can be identified.
+		let decrypted_failure = test_failure_attribution(&packet.data);
+		assert_eq!(decrypted_failure.short_channel_id, Some(0));
+	}
+
 	#[test]
 	fn test_missing_error_code() {
 		// Create a failure packet with a valid hmac and structure, but no error code.