HSBC Credit Card Payment Class Action Lawsuit Dismissed

Shared account holders who accused a bank of improperly using their payments for debts with different interest rates saw their HSBC credit card class action lawsuit dismissed for lack of cognizable injury.

In the order, U.S. District Judge André Birotte, Jr. noted that the claims of lead plaintiff George Burris revolved around the time of existing credit card debt, a payment and a subsequent cash advance. The advance, the judge noted, would have a higher APR than the existing credit card debt and the account holder believed that the payment would be applied to that.

Instead, HSBC had used the excess amount of the payment to pay down the existing debt and as such the plaintiffs sought in the class action lawsuit damages on violations of the Fair Credit Billing Act (FCBA) and a similar California state statute. They argued that the June 17, 2011 payment should apply to the June 11 cash advance and not the billing cycle ending on June 7.

However, the billing cycle is what mattered most to Judge Birotte. According to federal regulations, the card issuer may allocate the excess funds based on the APR “on the day the preceding billing cycle ends, on the day the payment is credited to the account, or on any day between those two dates.” As a result, he wrote in the order that the Burris account did not have the cash advance posted at the end of the last billing cycle, HSBC could therefore use the $880 payment to the existing debt.

Even if they had done so, the order dismissing the HSBC credit card payment class action lawsuit noted that the plaintiffs “do not allege that they gave Defendants written notice about the alleged error.” As such they did not fulfill their duties under the Fair Credit Billing Act even if there was a violation that could lead to a relevant economic injury.

Similarly, the Rosenthal Act focuses specifically on debt collection which doesn’t apply here, according to the judge. Instead, the HSBC credit card payment class action lawsuit contradicts the California Attorney General’s opinion that “due or owing” concerns only “debts that have become delinquent and subject to immediate collections activities.”

Since the judge found no way for the Burris plaintiffs to remediate the problems with their class action lawsuit, he dismissed it with prejudice.

The plaintiffs are represented by Robert W. Thompson and Bryan S. Owens of Callahan Thompson Sherman & Caudill LLP.

The HSBC Credit Card Payment Class Action Lawsuit is George Burris, et al. v. HSBC Bank USA NA, et al., Case No. 2:14-cv-02242, in the U.S. District Court for the Central District of California.