diff --git a/CHANGELOG.md b/CHANGELOG.md
index aa325609..9a5cb054 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -14,6 +14,7 @@ If you are upgrading from v0.16.x, replace the binary (or run `docker pull`). If
 - JMAP: 
   - Patching ids containing digits in JSON Pointers failes.
   - Patching nested objects with `null` values fails.
+- SQL directory: Return `Failed` instead of `Error` when the query returns no results.
 
 ## [0.16.4] - 2026-05-05
 
diff --git a/crates/directory/src/backend/sql/lookup.rs b/crates/directory/src/backend/sql/lookup.rs
index 31c1bfc6..bab6c9af 100644
--- a/crates/directory/src/backend/sql/lookup.rs
+++ b/crates/directory/src/backend/sql/lookup.rs
@@ -29,7 +29,7 @@ impl SqlDirectory {
                 .await
                 .caused_by(trc::location!())?,
         ) else {
-            return Err(trc::AuthEvent::Error
+            return Err(trc::AuthEvent::Failed
                 .into_err()
                 .details("SQL login query did not return an account")
                 .ctx(trc::Key::AccountName, username.to_string()));