Kim Gale  |  June 24, 2016

Category: Consumer News

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hsbc-logo-HSBC Bank agreed to pay $32 million in order to settle class action lawsuit allegations that it manipulated debit transactions on customer accounts in order to charge more overdraft fees.

Interestingly, the overdraft fees settlement came on the heels of a $429 million settlement that HSBC agreed to regarding misconduct in its mortgage servicing and foreclosure division.

The U.S. government and state attorneys general in 49 states and the District of Columbia reached that settlement with HSBC on Feb. 5.

Maximizing Overdraft Fees

In this latest overdraft fees settlement, the HSBC Bank was accused of allowing customers to make debit card purchases when their accounts held insufficient funds with the sole intention of the bank collecting a $35 overdraft fee.

In addition, HSBC allegedly used a software program that aligned transactions in a way that would maximize overdraft fees. By sorting the transactions from highest to lowest order, the bank could show the most expensive purchase first, meaning there was less money to cover the less costly items.

By arranging debits in this order, a customer could be charged multiple overdraft fees instead of just one overdraft fee had the transaction order been left in chronological order.

Here is an example of this creative accounting that was provided in the lawsuit:

“[I]f a customer has an account with a $50 balance and makes four transactions of $10 and one later transaction of $100 the same day, HSBC debits the transaction from the account largest-to-smallest, thus subjecting the customer to four overdraft fees. Conversely, if the $100 transaction were debited last (in the order it was made), the customer would only be subject to one overdraft fee.”

New York Supreme Court Judge Eileen Bransten granted initial approval of the $32 million settlement last October.

Still refusing to admit that there was anything wrong with the way it posted transactions, HSBC says that it has not violated any laws and only agreed to the terms of the settlement to avoid the cost of going to court.

The settlement amount will reimburse customers approximately 50 percent of the charges that they incurred.

Eligible Customers

HSBC class action settlement class members include all HSBC customers in the U.S. who incurred one or more overdraft fees on a HSBC account(s) as a result of posting transactions that included at least one debit card or point-of-sale transaction from highest to lowest dollar amount.

The class period is between Dec. 17, 2004 and June 30, 2010 for consumer accounts and between Dec. 17, 2004 and Nov. 30, 2011 for business accounts. Class members who were charged an overdraft fee after June 30, 2007 automatically will receive a payout or account credit.

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.

Do YOU have a legal claim? Fill out the form on this page now for a free, immediate, and confidential case evaluation. Some of the banks and credit unions being investigated include, but are not limited to:

  • State Employees Credit Union (North Carolina)
  • Pentagon Federal Credit Union
  • Boeing Employees Credit Union
  • Alliant Credit Union
  • Star One Credit Union
  • First Technology Federal Credit Union
  • America First Federal Credit Union
  • Suncoast Credit Union
  • American Airlines Federal Credit Union
  • Digital Federal Credit Union
  • Alaska USA Federal Credit Union
  • Vystar Credit Union
  • Citizens Equity First Credit Union
  • Teachers Federal Credit Union
  • ESL Federal Credit Union
  • Schools First Federal Credit Union

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.

Learn More

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Join a Free Bank & Credit Union Overdraft Fee Class Action Lawsuit Investigation

If your bank and credit union charged you overdraft fees, you may have a legal claim. Fill out the form on this page now to find out if you qualify!

An attorney will contact you if you qualify to discuss the details of your potential case.

Please Note: If you want to participate in this investigation, it is imperative that you reply to the law firm if they call or email you. Failing to do so may result in you not getting signed up as a client, if you qualify, or getting you dropped as a client.

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