Some consumers report being hit with excessive overdraft fees because of the HSBC overdraft protection programs they were enrolled in.

HSBC overdraft protection and similar programs at other banks and credit unions all across the country may be using unfair practices to take in as much money in overdraft fees from their customers as they can, or may have used such practices in the past.

HSBC has previously been targeted in litigation for allegedly unfair HSBC overdraft protection practices. Reports indicate that some banks and credit unions have been raising their overdraft fees excessively, as well as using other deceptive practices to increase overdraft charges.

If you have been hit by excessive fees from HSBC overdraft protection or overdraft programs from another bank, you may have a legal claim.

What Are Overdraft Protection Programs?

Overdraft protection programs like HSBC overdraft protection are meant to give customers extra padding in their accounts. With overdraft protection in place, customers are able to have money transferred to cover transactions when they would otherwise have hit the bottom of their accounts, and their card denied.

In exchange for this service, customers are charged a set overdraft fee. Overdraft fees vary from bank to bank and from state to state, but the national average is currently around $31. Many banks charge more than this, and some have even been raising their overdraft fees.

Overdraft fees are not just a one-time expense incurred each time a customer makes a transaction that overdraws their account. Any additional transaction on an overdrawn account will in turn bring its own fee and compound with the others, adding up quickly.

HSBC Overdraft Protection Settlement

Just last year, HSBC Bank agreed to a $32 million settlement to bring an end to a massive class action lawsuit over its HSBC overdraft protection policies. The overdraft class action lawsuit alleged that as part of HSBC overdraft protection policy, customer transactions were deliberately reordered so that it would increase the amount that customers had to pay in compounded overdraft fees.

Several other banks and credit unions are currently under investigation for allegedly using deceptive overdraft protection policies, and more financial institutions may be involved.

A variety of deceptive overdraft practices can be used to increase the amount of money a customer has to pay in overdraft fees. Some banks may deliberately re-order transactions to collect more in fees, which is the practice HSBC Bank was accused of in the lawsuit it settled last year.

Customers generally expect that their transactions will be processed chronologically, in the order they are made. But some banks may choose to re-order a customer’s transactions from highest to lowest rather than from first to last.

This may seem trivial at first, but it can have real financial consequences for customers. Reordering transactions in this manner makes each individual transaction increasingly more likely to overdraw a person’s account. In some cases, a larger fee processed earlier can cause a customer to overdraw their account earlier. Then, there are as many smaller transactions left still to be processed and charged with an overdraft fee as possible. This can leave customers with a much heftier fee than they were expecting.

Some bank customers claim that, back when they originally signed up for an account, they were not told all the details of the program. Others may not even have been told that they have the ability to opt out of the overdraft protection program.

Filing a Lawsuit Over Deceptive Overdraft Practices

HSBC Bank and several other banks and credit unions are under investigation for potentially using deceptive overdraft practices. If you have been affected by excessive fees or deceptive practices at your financial institution, you may be able to joint an overdraft fees class action investigation.

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