Judge Dismisses Class Action Lawsuit over HSBC Billing Disclosures

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Judge Dismisses Class Action Lawsuit over HSBC Billing Disclosures

By Anne Bucher

On Friday, Oct. 18, a New York federal judge dismissed a proposed class action lawsuit that accused HSBC Bank USA NA of improperly disclosing interest rate fees on credit card bills and wrongly assessing late fees, finding that the plaintiff had not stated a claim for which damages could be awarded.

Plaintiff Bruce Schwartz filed the class action lawsuit against HSBC in February, alleging that the bank had violated the Truth in Lending Act (TILA) by inaccurately disclosing the balance subject to interest and annual interest rate (APR) on several of his billing statements and by charging him a late fee even though he paid his credit card bill on time.

Schwarz argued that HSBC improperly represented that his purchase balance subject to interest was zero and that the bank inconsistently provided information on his statements about whether certain APRs were variable. By filing the class action lawsuit, he sought to represent a putative class of HSBC customers who claim they had similar experiences.

U.S. District Judge Paul Engelmayer granted HSBC’s motion to dismiss the class action lawsuit, finding that none of Schwartz’s allegations of TILA violations constituted a valid claim for relief. According to the judge, Schwartz failed to claim that HSBC actually charged him an incorrect APR and acknowledged he was billed appropriately according to the terms of his card member agreement.

Schwartz argued that HSBC’s failure to list his balance subject to interest as anything other than zero violated a provision of TILA requiring a creditor to disclose “the balance on which the finance charge was computed and a statement of how the balance was determined.” The judge found that no finance charge was computed for Schwartz’s account because his outstanding balance was subject to zero percent interest during the relevant period. Further, the judge found that the only balance for which a finance charge was computed was listed correctly.

Judge Engelmayer found that Schwartz misread the relevant statute as it applies to the alleged inconsistencies in the disclosure of the APR rates. According to the judge, the statute only requires the disclosure of the applicable rate, the balance to which it is applied and the nominal APR. It does not require disclosure of the variable or fixed status of a periodic rate. “Despite the contradictory statements as to whether Schwartz’s periodic rates were or were not variable, Schwartz does not allege that his statements lacked, or misstated, any of these required disclosures,” Judge Engelmayer said.

Schwartz also claimed in his class action lawsuit that HSBC had improperly imposed a $19 late fee in October 2012 even though he paid his bill on time. However, HSBC reversed the late fee before the lawsuit was filed. “Because there are no damages for Schwartz to recover on this claim, this claim, too, must be dismissed,” Judge Engelmayer said.

Schwartz is represented by Brian L. Bromberg and Harley J. Schnall.

The HSBC Billing Disclosures Class Action Lawsuit is Bruce Schwartz, et al. v. HSBC Bank USA NA, Case No. 1:13-cv-00769, in the U.S. District Court for the Southern District of New York.

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