Millions of Americans having been paying steep overdraft fees for years, with banks raking in the profits to the tune of $35 billion last year alone.

Now, some consumers are questioning the fairness of these allegedly unreasonable overdraft fees, including HSBC Bank overdraft practices.

What are HSBC Bank Overdraft Practices?

Under their Rules For Consumer Deposits Accounts, HSBC states that an overdraft occurs when a customer does not have enough money in their account to cover a transaction, but the bank pays it anyways.

HSBC Bank overdraft practices specify that the bank can cover a customer’s overdraft through either standard HSBC Bank overdraft practices or through an overdraft protection plan.

Through standard HSBC Bank overdraft practices, the bank authorizes and pays overdrafts for checks and overdrafts for preauthorized automatic bill payments.

However, it does not authorize and pay overdrafts for ATM and everyday debit card transactions for consumer checking accounts other than HSBC Premier unless the customer is enrolled in an overdraft protection plan.

Under standard HBSC Bank overdraft practices, the bank charges an Insufficient Funds (NSF) or Unavailable Funds (UNA) fee.

According to some consumers, HSBC Bank overdraft practices can cost the account holder hundreds of dollars in a matter of days, or even hours, when they may be overdrawn only by a few dollars.

Even more alarming, a customer’s account may not actually be overdrawn at the the time the overdraft fee is charged or at the time of the transaction.

Consumers aren’t the only ones who think HSBC Bank overdraft practices are unreasonable. The Federal Reserve has now taken action as well. In the past, banks like HSBC were able to charge overdraft fees by buying the customer’s consent within the fine print of banking documents.

However, according to a new Federal Reserve rule, banks can no longer assess overdraft fees without customers “opting in” to the program – meaning the consumer must agree to the bank’s overdraft program.

The Problem with Overdraft Fee Practices

There are a number of other problems with overdraft fees, such as their similarity to payday loans and how they act like credit cards, but are worse.

A 2005 report from the Consumer Federation of America found that overdraft fees were similar to payday loans in that those without enough money to make ends meet until the next payday were effectively given a cash advance by being able to overdraw their account.  However, overdrawing one’s account was similar credit card usage.

Yet, with credit cards, banks aren’t allowed to take funds directly from a person’s bank account to pay off a credit card debt, but those who overdraw their account with a debit card “lack this protection.”

Additionally, a 2010 article for The Economist reported that “according to the FDIC, low income (people who earn less than $30,000) earners are nearly twice as likely to have paid an overdraft fee,” and that it wasn’t uncommon for many of these low-income people to rack up fees to the point where they can’t pay them all.

When this occurs, banks close the indebted accounts, and it is extremely difficult for people to open accounts at other banks.

Overdraft Fees Lawsuit

If you’re one of the millions of Americans who have been victim to HSBC Bank overdraft practices, contact an overdraft fee attorney to find out more information about bank overdraft fee lawsuits and class action bank overdraft fee lawsuits and what actions you can take to get reimbursed.

Note: Recent or current HSBC customers who suspect they may have been charged improper overdraft fees may need to provide bank statements to overdraft attorneys, but this information will be kept private and confidential.

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