More and more consumers are reporting that they have been hit by unfair HSBC overdraft charges, and even that they were the target of deceptive practices. If you have been affected by excessive HSBC overdraft charges or unfair practices, you may be entitled to compensation through litigation.

Overdraft Program Basics

In recent years, overdraft fees have become a standard feature at banks and credit unions across the country. Unfortunately, some financial institutions may not be informing their customers of the details of their overdraft programs, rearranging transactions to compound charges, or using other deceptive practices to wring out the most they can in overdraft fees. Others charge excessive overdraft fees.

Overdraft protection programs are meant to allow consumers to make transactions even after hitting the bottom of their accounts, in exchange for a set overdraft fee. Overdraft fees are, on average, around $31, though many banks charge more.

For many customers, overdraft protection can be beneficial, and can save them from being unable to pay. However, overdraft protection can cause problems for others.

Overdraft charges are incurred every time a person makes a transaction overdrawing their account. They can pile up once the account balance hits zero, which can quickly add up and leading to additional fees. Those whose accounts are continuously low may be hurt the worst by overdraft charges—an issue worsened by banks that seek to take advantage of their customers with deceptive practices or excessive fees.

HSBC Overdraft Charges

Several banks and credit unions are being investigated for engaging in deceptive overdraft protection policies, and more still may be using similar practices. HSBC Bank has settled a massive class action regarding its deceptive HSBC overdraft charges for $32 million. The lawsuit was filed over allegations that HSBC overdraft policies deliberately reordered transactions to increase the amount customers would be forced to pay in overdraft fees.

Deceptive Overdraft Practices

There are a few methods that a bank may use to incur excessive overdraft charges on their customers. For instance, when customers sign up for an account, they may not be told all the details of the program or its associated fees. Others may not even be informed that they have the ability to opt out of the overdraft protection program.

Customers generally expect that their transactions will be processed chronologically, in the order they are made. But some banks may deliberately re-order transactions to collect more in fees.

Indeed, reordering transactions from highest dollar amount to lowest, rather than from first to last, makes each transaction increasingly more likely to overdraw an account. This can mean that a large fee processed earlier can tip a customer to overdraw their account earlier, with even more transactions that can incur overdraft fees. Ultimately, customers can be left paying far more than they ever expected in overdraft fees.

Filing a Lawsuit Over Deceptive HSBC Overdraft Charges

HSBC agreed to settlement a lawsuit over some of its old HSBC overdraft fee policies, namely excessive HSBC overdraft charges. If you were also affected by these or similar overdraft policies, but were not covered by that HSBC overdraft fee settlement, you may be able to file a class action lawsuit to pursue your own compensation.

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