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A settlement agreement worth $30 million has gotten preliminary approval in a New York state class action against HSBC Bank.
On the plaintiff’s motion, Justice Eileen Bransten of the New York Supreme Court granted initial certification of the proposed class and simultaneously gave preliminary approval of the proposed settlement.
Plaintiffs in the class action lawsuit had alleged HSBC purposely processed their clients’ transactions in the order of highest to lowest. They said this practice increased the frequency of overdrafts and with them the number of times the bank could hit its customers with overdraft charges.
Class members who may be eligible to receive a cut of the settlement include each holder of an HSBC consumer account who was hit with an overdraft charge after transactions in their account were processed in the order of highest dollar amount to lowest between December 17, 2004 and June 30, 2010. That time window extends to November 30, 2011 for holders of HSBC business accounts.
The $30 million settlement fund, in addition to compensating class members for their losses, will also cover attorneys’ fees, administration and notice costs, and whatever awards are finalized for the lead plaintiffs.
Three other class action lawsuits over substantially the same allegations were initiated in federal court in 2012, after the New York state action had gotten underway. The federal plaintiffs objected to the settlement agreement in the New York action, but the state judge found their objections not relevant since they were not parties to the agreement and would have an opportunity to object before final approval of the settlement.
Judge Bransten also said she plans not to grant final approval of the settlement while the federal actions are still pending. However, in April 2015 federal judge Arthur D. Spratt voiced no objection to allowing the settlement in the state action to be completed. Judge Spratt’s decision is now on appeal.
The hearing for final approval of the settlement agreement is scheduled for April 6, 2016.
The HSBC Overdraft Fees Class Action Lawsuit is In re: HSBC Bank USA NA Checking Account Overdraft Litigation, Case No. 650562/2011, in the Supreme Court of the State of New York, County of New York.
Credit Union Overdraft Fees
The same issue of excessive overdraft fees has brought negative attention to credit unions as well as banks. The Consumer Finance Protection Bureau has begun to draft rules that will prevent the highest-to-lowest transaction order complained of in the New York class action.
The Bureau is also considering capping the size of the overdraft fees and limiting how frequently they can be imposed. Credit unions may also be required to give more thorough and understandable notice of the terms of their overdraft protection terms. The Bureau expects the rules will be finalized and effective in late 2015 or early 2016.
These issues don’t just affect big national credit unions. Some of the more local and regional credit unions may also be implicated by new rules, such as:
- Teachers Federal Credit Union, Smithtown, NY
- ESL Federal Credit Union, Rochester, NY
- Delta Community Credit Union, Atlanta, GA
- Police & Fire Federal Credit Union, Philadelphia, PA
- Pennsylvania State Employees Credit Union, Harrisburg, PA
UPDATE: The HSBC Overdraft Fee Class Action Lawsuit Settlement is open! Class Members have until June 6, 2016 to file Claim Forms.
Do YOU have a legal claim? Fill out the form on this page now for a free, immediate, and confidential case evaluation. The attorneys who work with Top Class Actions will contact you if you qualify to let you know if an individual lawsuit or class action lawsuit is best for you. Hurry — statutes of limitations may apply.
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