diff --git a/tests/plugins/fail_htlcs_invalid.py b/tests/plugins/fail_htlcs_invalid.py
new file mode 100755
index 000000000..95881d8b7
--- /dev/null
+++ b/tests/plugins/fail_htlcs_invalid.py
@@ -0,0 +1,20 @@
+#!/usr/bin/env python3
+
+from pyln.client import Plugin
+
+plugin = Plugin()
+
+
+@plugin.hook("htlc_accepted")
+def on_htlc_accepted(onion, plugin, **kwargs):
+    plugin.log("Failing htlc on purpose with invalid onion failure")
+    plugin.log("onion: %r" % (onion))
+    # WIRE_TEMPORARY_CHANNEL_FAILURE = 0x1007
+    # This failure code should be followed by a
+    # `channel_update`; we deliberately return
+    # a 0-length `channel_update` to trigger
+    # issue #3757 reported by @sumBTC.
+    return {"result": "fail", "failure_message": "10070000"}
+
+
+plugin.run()
diff --git a/tests/test_pay.py b/tests/test_pay.py
index 6c0190481..66dada0a9 100644
--- a/tests/test_pay.py
+++ b/tests/test_pay.py
@@ -3017,3 +3017,30 @@ def test_keysend(node_factory):
 
     inv = invs[0]
     assert(inv['msatoshi_received'] >= amt)
+
+
+@pytest.mark.xfail(strict=True)
+def test_invalid_onion_channel_update(node_factory):
+    '''
+    Some onion failures "should" send a `channel_update`.
+
+    This test checks to see if we handle things correctly
+    even if some remote node does not send the required
+    `channel_update`.
+    '''
+    plugin = os.path.join(os.getcwd(), 'tests/plugins/fail_htlcs_invalid.py')
+    l1, l2, l3 = node_factory.line_graph(3,
+                                         opts=[{},
+                                               {'plugin': plugin},
+                                               {}],
+                                         wait_for_announce=True)
+
+    l1id = l1.info['id']
+
+    inv = l3.rpc.invoice(12345, 'inv', 'inv')['bolt11']
+    # Should fail, since l2 will always fail to forward.
+    with pytest.raises(RpcError):
+        l1.rpc.pay(inv)
+
+    # l1 should still be alive afterwards.
+    assert l1.rpc.getinfo()['id'] == l1id