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A state judge in New York preliminarily approved a $30 million settlement to resolve a class action lawsuit over HSBC Bank USA NA’s overdraft fees and policies over concerns from plaintiffs in a nearly identical class action lawsuit in federal court.
Last week, New York Supreme Court Judge Eileen Bransten granted initial certification to the Class and agreed to let the settlement proceed.
The class action lawsuit alleges that rather than processing transactions in the order received, HSBC rearranged the transactions to be processed from largest to smallest. According to the overdraft fee class action lawsuit, this practice purposely increased the number of overdraft fees charged and brought in a lot of revenue for the bank.
The federal lawsuits that parallel the state lawsuit were consolidated in June 2013 into a multidistrict litigation. As soon as the state class action was initially announced in March, lawyers for the federal HSBC actions have tried to block the state class from settling, and have accused state plaintiffs of manipulating the class action process for monetary gain.
The $30 million in the settlement equals approximately to half of the total fees that HSBC illegally charged consumers. The total amount of losses the state and federal cases differed, but according to Judge Bransten, the amounts were fairly comparable.
Judge Bransten explained, “Even if the court accepts the federal plaintiffs’ calculation of total damages, at $76 million, the $30 million in recovery here still represents approximately 40 percent of the class members’ total losses, again, a fair, adequate and reasonable settlement and well within the possible range.”
Since the spring of this year, the state and federal courts have been going back and forth about how to address the similar overdraft fee class action lawsuits. In March, it was reported that the HSBC reached a “secret” deal with the state plaintiffs, apparently to dodge the federal class action lawsuit.
Judge Bransten chose to defer the ruling on the state settlement while the federal case was pending, but U.S. District Judge Arthur D. Spatt gave Judge Bransten the go-ahead in April for the state settlement to continue.
While the general class action settlement was approved by Judge Bransten, the proposed $5,000 in fees per lead plaintiff and attorney’s fees were not included in the settlement. Twenty-five percent of the fund has been allocated for such fees.
According to Judge Bransten, the plaintiffs and attorneys have not detailed specific evidence that has demonstrated what they have done to earn the potential fees, but may provide such details before the final hearing on the settlement.
The approved members of the HSBC class action settlement include any customers who incurred at least one overdraft fee once their transactions were posted in order from the highest transaction to the lowest. The overdraft fees must have been incurred between Dec. 17, 2004 and June 30, 2010. If overdraft fees occurred on a consumer’s business account, the date range extends to Nov. 30, 2011.
The state settlement will certainly be considered in the federal class action lawsuits, but it is unclear how it will impact the federal judgment.
The state court plaintiffs are represented by Adam S. Turk of Turk & Davidoff PLLC, and Barry Himmelstein of Himmelstein Law Network.
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.
UPDATE: The HSBC Overdraft Fee Class Action Lawsuit Settlement is open! Class Members have until June 6, 2016 to file Claim Forms.
Join a Free Credit Union Overdraft Fee Class Action Lawsuit Investigation
If you have incurred overdraft fees from a credit union, you may be eligible to participate in a free class action lawsuit investigation. Learn more at the Credit Union Overdraft Fees Class Action Lawsuit Investigation.
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10 thoughts on$30M HSBC Overdraft Fee Settlement Gets Preliminary Approval
The Fairness hearing was held on April 6th. Was it approved? If it wasnt – when can we expect the court to make a decision?
UPDATE: The HSBC Overdraft Fee Class Action Lawsuit Settlement is open! Class Members have until June 6, 2016 to file Claim Forms.
I would like to know where my state taxes went in2011 when they cancelled my acct.
I have dealt with this company and they have put derogatory comment on my credit report. They have even filed a report to the court. I’ve got proof that this bill was paid in full have taking this to court to have them remove it and its still on there. This has had a huge impact on my credit score.
I want to file as HSBC really screwed me over!
Want to be a part of this
I am a former HSBC member.
I was dealing with HSBC but had to close my account as well.
Yes I dealt with them and still are receiving letters with outlandish ed interest statement that’s double or triple in the amount owed.
I deal with them and like to be part of law suite.