Overdraft programs are now a fairly standard feature at bank and credit unions across the country. However, some financial institutions may use their overdraft programs to take advantage of their customers, using deceptive or misleading practices. According to reports, customers may face deceptive overdraft practices at HSBC Bank, resulting in being charged excessive amounts in fees.

Customers have reported being hit with steadily growing overdraft fees. In some cases, customers claim that their banks even processed their transactions out of order to incur the greatest number of overdraft fees possible. Overdraft programs, when manipulated like this, can cost consumers a substantial amount. If you have experienced unfair overdraft practices at HSBC Bank, you may have a legal claim.

Basics of Overdraft Programs

Overdraft protection programs can offer customers some extra padding for their checking accounts, allowing them to cover transactions even after they would have otherwise hit the bottom by transferring money from a linked account or loaning money from the bank. Customers are then charged a set overdraft fee. Overdraft fees average around $31, though some states tend to have higher overdraft fees than others. Banks all across the country have been steadily increasing their overdraft fees for years, charging their customers more and more.

Overdraft fees are incurred each time a customer makes a transaction that overdraws their account, which can quickly add up.

Deceptive Overdraft Practices

Last year, a class action lawsuit over overdraft practices at HSBC Bank was ultimately settled for $32 million. According to the lawsuit, overdraft practices at HSBC Bank involved deliberately reordering transactions in order to increase the amount customers would be forced to pay in overdraft fees.

Banks can use several methods to charge their customers extra overdraft fees, other than simply raising the fee itself.

In some cases, customers are simply not informed of how the overdraft program works. 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—though voluntary opting in to an overdraft protection program has been required since August of 2010.

Some banks may deliberately rearrange transactions to collect more in fees, deliberately skewing the order of customers’ transactions to incur the greatest number of fees possible.

Customers generally expect that their transactions will be processed chronologically, in the order in which they are made. But some banks have been caught purposely re-ordering a customer’s transactions from highest to lowest rather than from first to last, which 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 left to be charged an overdraft fee. These overdraft fees then compound, and customers are left with a much heftier sum to pay.

Filing an Overdraft Lawsuit

A number of financial institutions are being investigated for the use of unfair or deceptive overdraft practices, including HSBC Bank, Capital One, UMB Bank, Boeing Employees Credit Union (BECU), and America First Credit Union.

If you were also affected by these overdraft fee policies, but did not participate in that HSBC overdraft settlement, you may be able to file a class action lawsuit to pursue your own compensation.

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