Bank services like overdraft fees at HSBC Bank are a common feature of banks and credit unions across the country, but some financial institutions use these programs to take advantage of their customers.

Overdraft Protection Programs

Overdraft protection is meant to give bank customers some extra padding in their checking accounts. When they would otherwise have hit the bottom, overdraft protection offers customers the ability to have money transferred to cover their transactions in exchange for a set overdraft fee.

Overdraft fees are generally fairly substantial—the average fee is roughly $31, though many banks charge more. While this can certainly help some customers who need to make a transaction, it can also cause problems.

Overdraft fees can add up fast. Any additional transaction on an overdraft account will bring its own fees, which can quickly add up to a serious expense. If a customer’s finances are generally secure and the overdrawn account was a fluke, this may not be too much of an issue. But for many customers who routinely hover near the bottom of their accounts, this can actually present a problem. The fees may be much more than they originally bargained for. In fact, customers may not have been given adequate warning about the overdraft program and its related fees when they signed up for an account. Banks may even use deceptive practices to get customers to pay even more in overdraft fees than strictly necessary.

Overdraft Fees at HSBC Bank

Several banks and credit unions are currently under investigation for questionable overdraft protection policies, and more still may be using these practices. A few years ago, HSBC Bank settled a massive class action regarding its overdraft protection program for a whopping $32 million. The lawsuit was filed over HSBC’s alleged practice of deliberately reordering transactions to increase the amount customers would be forced to pay in overdraft fees.

Deceptive Overdraft Practices

Overdraft programs bring in billions to banks every year, and some financial institutions may be pushing outside the realm of legality in order to ensure their programs continue to be lucrative.

There are a few methods that may be used to keep customers in the dark about a bank’s overdraft policy. For instance, 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 be informed that they have the ability to opt out of the overdraft protection program.

One particularly deceptive practice that can be used to collect more overdraft fees from customers is re-ordering transactions. Banks can deliberately skew the order of customers’ transactions to incur the most fees possible.

Customers generally expect that their transactions will be processed chronologically, in the order they are made. However, some banks may purposely re-order a customer’s transactions from highest to lowest rather than from first to last, making each transaction increasingly more likely to overdraw an account. This can end up meaning 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. Customers may be left with a much heftier charge than they ever expected.

The allegedly excessive overdraft fees at HSBC Bank were caused by a somewhat subtle transaction posting order practice that can have a dramatic effect.

Filing a Lawsuit Over Deceptive Overdraft Practices

Some customers who have been affected by deceptive overdraft practices have begun filing lawsuits against their banks and credit unions, including HSBC Bank. If you have been subjected to unfair overdraft fees at HSBC Bank overdraft policy or deceptive practices at another financial institution, you may be able to join a class action overdraft fees lawsuit.

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