At one time or another, most of us have faced overdraft fees imposed by our financial institution when we made a purchase but didn’t have sufficient funds in our checking account to cover it.

We may have thought that we had more money in our account or our paycheck deposited into our checking account later than we anticipated or a calculation error left us with a smaller balance than we had anticipated.

Whatever the reason, more cash was needed than was in the account and the bank covered the debt. HSBC Bank overdraft fee practices are one such example.

How Do Overdraft Fees Work?

Essentially, overdraft fees work as cash advances from your bank that charge a very high interest rate for a very short term loan.

When you don’t have enough money in your checking account to cover a point-of-sale transaction or an ATM withdrawal, the bank or credit union steps in and pays the amount on your behalf.

As a result of offering this service to you, the bank or credit union collects a fee for the service. In many cases, multiple overdraft fees may stack up in a single day before the checking account balance is caught by the consumer and brought back into the positive.

As of 2010, all financial institutions require that customers actively opt in for overdraft fee services. Prior to this time, banks and credit unions could automatically enroll customers in these types of programs without their express consent.

Overdraft fees account for a very large revenue for financial institutions, and some consumers feel that the overdraft practices at various banks and credit unions have been manipulated to give more revenue to the banks at the expense of the customers.

HSBC Bank Overdraft Fee Practices

One financial institution that has particularly come under fire for potentially improper overdraft fee practices is HSBC Bank.

Recent customers have accused the bank of employing practices relating to overdraft services that purposely charge customers more for overdrafts than they should have been charged.

The accusations against the bank say that instead of processing transactions in the order they were received, HSBC Bank instead rearranged those transactions to be processed from largest to smallest.

In employing this practice, this caused the number of overdraft fees charged to be purposely increased and brought in additional revenue for the bank, according to the claims.

In fact, a settlement was reached with the financial institution over allegations that HSBC Bank overdraft fee practices were improper. The settlement resolved litigation in the state of New York and included a number of consolidated cases.

There are currently federal cases pending.

Like many cases settled before the lawsuit goes to trial, the defendant, in this case HSBC bank, does not admit any wrongdoing yet agrees to a settlement to avoid the uncertainty of continuing the litigation.

Current customers are continuing to question HSBC bank overdraft fee practices in light of the previous accusations against the company.

Taking Action Against HSBC Bank Overdraft Fee Practices

If you believe you have been the target of HSBC Bank overdraft fee practices that may have been improper, including having your transactions processed from largest to smallest rather than in the order received, you may be entitled to take legal action.

An attorney can review your case for free and can help you decide if you are eligible to participate in a class action lawsuit investigation into bank overdraft fee practices.

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