diff --git a/htlcswitch/hop/iterator.go b/htlcswitch/hop/iterator.go
index c1073b1da..c72d6c0a4 100644
--- a/htlcswitch/hop/iterator.go
+++ b/htlcswitch/hop/iterator.go
@@ -363,7 +363,14 @@ func (p *OnionProcessor) DecodeHopIterators(id []byte,
 		if replays.Contains(uint16(i)) {
 			log.Errorf("unable to process onion packet: %v",
 				sphinx.ErrReplayedPacket)
-			resp.FailCode = lnwire.CodeTemporaryChannelFailure
+
+			// We set FailCode to CodeInvalidOnionVersion even
+			// though the ephemeral key isn't the problem. We need
+			// to set the BADONION bit since we're sending back a
+			// malformed packet, but as there isn't a specific
+			// failure code for replays, we reuse one of the
+			// failure codes that has BADONION.
+			resp.FailCode = lnwire.CodeInvalidOnionVersion
 			continue
 		}
 
diff --git a/itest/lnd_misc_test.go b/itest/lnd_misc_test.go
index bd71fa842..62a568e29 100644
--- a/itest/lnd_misc_test.go
+++ b/itest/lnd_misc_test.go
@@ -219,7 +219,7 @@ func testSphinxReplayPersistence(ht *lntest.HarnessTest) {
 	// Assert that Fred receives the expected failure after Carol sent a
 	// duplicate packet that fails due to sphinx replay detection.
 	ht.AssertPaymentStatusFromStream(payStream, lnrpc.Payment_FAILED)
-	ht.AssertLastHTLCError(fred, lnrpc.Failure_INVALID_ONION_KEY)
+	ht.AssertLastHTLCError(fred, lnrpc.Failure_INVALID_ONION_VERSION)
 
 	// Since the payment failed, the balance should still be left
 	// unaltered.