The HSBC overdraft policy, as well as similar policies used by other banks like Capital One, have come under fire from consumers over allegations that the policies violate existing laws.

HSBC Overdraft Policy Comes Under Fire

Many reports filed by consumers about the HSBC overdraft policy argue that the overdraft fee practices are harmful to consumers. Consumers point out that overdraft fees have been rising on debit card balances, ATM withdrawals, and checks nationwide.

Plenty of credit unions and banks have been developing new overdraft policies that may allow them to charge consumers when a bank client takes out more money than they have in their credit accounts. In some of these cases, the HSBC overdraft policy allegations include claims from consumers that the re-ordering of the charges coming out of the account are putting the consumers at a disadvantage and resulting in increased fees.

Allegedly, these banks process the transactions out of order in order to maximize the amount they receive in overdraft fees. This practice has prompted the Consumer Financial Protection Bureau to evaluate this situation and consider making new rules. Currently, plenty of banks named in these complaints and lawsuits are allegedly still carrying out this practice.

Under their current overdraft fee policies, the banks might charge $25 or $35 for every single overdraft charge; however, often only one or two of the charges would have pushed the consumer into a negative balance. When banks process transactions in largest-to-smallest order, the consumer faces an overdraft fee for every single charge against their negative account, prompting hundreds of dollars in fees in some cases and pushing them further into the red.

Overdraft fees are charged by credit unions or banks after money has been moved from the bank into an individual checking account to pay for an individual transaction. The credit union or bank then imposes a fee for that loan or that transfer.

Sometimes the banks may refer to these overdraft fees as insufficient fund fees. Financial institutions, however, are prohibited from charging overdraft fees to consumers unless that consumer has proactively opted into that overdraft coverage or overdraft protection.

There are many different credit unions and banks that are currently under investigation and the subject of numerous reports from consumers who allege that this policy puts them at a disadvantage and is unfair and unethical. The HSBC overdraft policy is just one example of a policy that has come under fire.

Class action lawsuits have also been filed over these policies due to the increasing number of consumer complaints about these practices in recent years. Unfair overdraft practices, however, still allegedly continue in the form of the HSBC overdraft policy and those carried out by other banks, including First Wayne Bank, The Bank of Oklahoma, Commerce Bank and Capital One.

Some of the most common causes alleged by these lawsuits include mismanagement of funds, improper financial practices and failing to disclose fee structures. Consumers have started to fight back by turning to legal action when overdraft fees were purposely processed out of order, in order to maximize overdraft fees.

ATTORNEY ADVERTISING

The choice of a lawyer is an important decision and should not be based solely on advertisements.