In re HSBC Bank, USA, N.A., Debit Card Overdraft Litigation

1 F. Supp. 3d 34 (2014)

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In re HSBC Bank, USA, N.A., Debit Card Overdraft Litigation

United States District Court for the Eastern District of New York
1 F. Supp. 3d 34 (2014)

Facts

HSBC Bank, USA (HSBC) (defendant) was a bank that issued debit cards to its checking account customers. The cards allowed customers to pay for purchases or withdraw money from the account from automated teller machines. HSBC had an overdraft-protection program under which HSBC would honor a transaction made by customers even if the customer’s account did not have sufficient funds to cover the transaction—an overdraft transaction—rather than declining the transaction. In such instances, HSBC would charge the customer a $35 overdraft fee. Although HSBC could determine at the time of the transaction whether the customer had sufficient funds to cover the transaction, HSBC did not notify customers when a transaction would cause an overdraft. Further, HSBC was alleged to have posted debit transactions nonchronologically, listing the debits from largest to smallest amounts. Listing debit transactions nonchronologically resulted in customers incurring more overdraft transactions, and more overdraft fees, than if the debits were listed in chronological order or smallest to largest order. HSBC was sued in a class action for violating state law in several states for operating its overdraft program in an unlawful manner. HSBC contended that claims against it were preempted by federal law and federal regulations.

Rule of Law

Issue

Holding and Reasoning (Spatt, J.)

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