Category: Anti-Consumer Hall of Shame

(This post includes my specific complaint about HSBC’s failure to close my account after I had paid my balance. However, over time, I have expanded this post to include helpful information for US consumers about how to fight the business practices of HSBC).

If you are an American and have a problem with an HSBC-backed credit card, you probably only need to read my Tips for Handling a Dispute with a Credit Card Company.

March 9, 2009 Update: I have just started the www.hsbccreditcardsucks.com website. It is now dead, but here is a summary of what is said:

10 Reasons Why HSBC is the world’s worst credit card

1. HSBC doesn’t respond to written correspondence sent to them by post.
2. HSBC will not provide a copy of the credit card agreement upon request, either on the website, or via post.
3. HSBC does not provide written information on their website about how to pay off a final balance and close the account for good.
4. HSBC is linked to Household International, a credit card issuer well-known for its predatory lending practices (It settled a $486 million lawsuit with 46 states in 2002). HSBC integrated with Household International in 2003, and some allege that the current HSBC uses many of HI’s unsavory business practices.
5. HSBC has a contact form which (in my experience) works rarely. Even when it does work, HSBC doesn’t allow you to have a record of emails you have sent to them (except by cutting-and-pasting onto a MS Word document).
6. HSBC disregards legal contracts. In my individual case, HSBC agreed to a written counteroffer I made to resolve our dispute, but then promptly disobeyed the terms of it.
7. When you dispute a charge in writing, instead of actually investigating the complaint, HSBC will send a generic reply which shows no evidence that it actually investigated the item being disputed.
8. HSBC will not investigate your account after you have complained to a credit-reporting agency. HSBC is legally obligated to take action and contact the customer. In my specific case, HSBC sent a generic reply refusing to take any action until I provided documentation (This was long after I had sent them lots of documentation already).
9. HSBC (like many other banks) gambled and lost billions of dollars on subprime mortgages.
10. Recent complaints have shown that HSBC has raised interest rates and lowered credit limits to a dollar amount dangerously close to a customer’s current balance. This practice may not be illegal (and other credit cards seem to be doing the same thing), but it increases the likelihood that HSBC will award itself over-the-limit fees which result from it.

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Ok, HSBC, this means war!

I closed this account by paying the balance in full as quoted by the customer service rep. (She quoted an amount higher than the current balance, saying that some interest changes hadn’t been factored in).

I sent an email to them confirming my request to cancel the account. I received an email confirmation from a HSBC representative. So what happened?

HSBC added $7 to the $0 balance, and when I protested, they added $20 late charge. I have sent these guys 3 certified mails. Here is what I have gathered:

1. They simply do not read their mail (negligence as a matter of corporate policy).
2. Their contact/email form has been broken (except for the first time I tried). Incompetence bordering on negligence.
3. They made it next to impossible to obtain a copy of the original legal agreement to know exactly what the agreement is. (Deceptive trade practice).
4. They accepted a counteroffer I made and then refused to admit that they did this. Hey, guys, I have the check as evidence! (dishonesty, deceptive trade practice).
5. They failed to follow the terms of the counteroffer which they agreed to.. (deceptive trade practice).

You may ask, why did I have to resort to send certified mails and counteroffers? The plain fact is that they never responded to a single correspondence of mine; I had no choice.

Now they are ruining my credit report. Every month they award themselves the right to impose a fee of $20. Now it is $120. I know they don’t have the right to this. And if someone with half a brain were to look over the facts, they would be inclined to agree.

I have dealt with many unscrupulous banks and credit companies. So far AT&T,  Citibank  are the worst. Chase has good customer service, but their promotions are just as tricky to figure out. But what HSBC has done in the last 6 months to me is much worse than all the banks combined.

Here is where it gets interesting. This time, after having been burned once or twice, I know how to keep notes punctiliously. The facts are on my side, and I am determined to seek damages from HSBC, whatever the cost.

If you have other HSBC horror stories to relate, feel free to relate them here.

Update: February 25 2009. Wow, so much has happened over the past few months. And so little.

First, let me offer concrete advice. when dealing with a national bank, file a complaint with the Office of the Comptroller of the Currency as soon as possible! They are located at gethelpwithmybank.gov; they are a federal institution set up precisely to handle disputes between the credit cards and consumers. They have a PDF for filling out, and the credit card is required to provide a written response to an OCC complaint within 2 weeks. You should do this first when you have a complaint. If I had known about it when I started my complaint, I would have definitely tried that avenue. Helpwithmybank also gave great information and advice about how to handle these kinds of disputes.

Second, if you are dealing with any credit card company, you need to keep diligent records. I recommend creating a free account at Google Docs. Then note any conversations with telephone reps and include copies of any correspondence with HSBC in a single file. Google docs keeps versioned date-stamped versions of this document, so you could demonstrate when you made notations. Of course, anyone could question the legitimacy of a document, but the Google Doc datestamp is likely to be persuasive. Importantly, when you send correspondence to HSBC with confirmation of delivery, you should type the numbers of the tracking code into the Google Doc.

Third, HSBC messed up my credit score and in fact have never sent any kind of response to my correspondence. If anything, they simply send non-specific denials and requests for information. Hello, I thought I already did that.

I decided to file a lawsuit against HSBC, but there were several extraordinary circumstances relating to my case, so I would not recommend this strategy for everybody. Instead, for Americans, I would recommend filing a complaint with the OCC as soon as possible! Here is a FTC Summary of all the Credit Card obligations under Fair Credit billing (highly recommended). Here are  many FTC consumer guides about credit cards (in PDF form) for free download.

A commenter made me aware of a scam reporting site with lots of complaints about HSBC specifically (including a lot of complaints from different countries).

Here’s an article about how much money HSBC has gambled and lost on subprimes (Hint: it’s a lot).  Here’s a series of posts of people who have sued HSBC..and won! (in UK at least). Here’s the larger UK forum about HSBC. These two links don’t apply to US, but it is heartening to see the groundswell of complaints against HSBC.

Here’s a US-based credit card forum specifically about HSBC.   Here’s a list of complaints by people in the US about HSBC-related problems.

Here is contact information for serving legal documents (valid as of February 28, 2009)

HSBC Bank Nevada, NA
c/o Walter Menezes
1441 Schilling Place
Salinas CA 93901

One detail: This address may be for HSBC, which has several entities.  The defendant is HSBC Bank Nevada, NA. You can call  HSBC Executive Decisions department at 800 753 6529 ext 2608 to find out whether this information is specific for your situation. The headquarters is in Illinois, so it can be very confusing.

Finally, two interesting bits from the Office of the Comptroller of the Currency:

I  currently have a billing dispute regarding my credit card / personal line of credit / home equity line of credit. While the dispute was under investigation, the bank reported my account negatively to the credit-reporting agencies. Can it do this?

No. Generally, if you have filed a proper billing error dispute with a national bank, the bank shall not make an adverse report to any person about your credit standing.The bank also should not report that an amount or account is delinquent because you failed to pay the disputed amount—or related finance or other charges—while the investigation proceeds. If your bank has made a negative report despite your having filed a billing error dispute, you should file a written complaint with our office.

I am suing the bank. Should I serve the registered agent?

National banks do not have “registered agents.” Therefore, matters relating to registered agents should be directed to the specific bank’s president. Please contact the bank directly to obtain the name and business address of the president.

You can file a complaint with the FTC (it’s a very nice easy-to-complete interactive form). If you file such a complaint, however, it will help the FTC but it does not resolve individual complaints.  For this reason, I still recommend filing a complaint with the OCC.

By the way, I feel compelled to recommend a credit card I do like. Amalgamated Bank of Chicago. I’ve had this card for 15 years, and they have never given me any hassle about anything!  And their interest rates are low too. Read this Motley Fool article for what to look for in a credit card.

February 26 Update. Wow, it turns out that HSBC missed the deadline to send a response to my petition. I am theoretically eligible for a default judgment. Wow, I didn’t expect this.

February 28 Update.  HSBC made a reply, and the court date is early April.

February 28 Update 2. I am keeping a log of  similar complaints I find on ripoffreport and other credit card forums.

March 1 Update. Household HSBC Watch is a blog/news source dedicated to covering the abuses/misbehavior by HSBC Bank in USA.  This is probably the most comprehensive news source for US-related incidents. See complaints related to credit reports,  and  payment-issues.  Apparently in the 1990s HSBC bought a company known for fraud called Household International, and the blogger explicitly accuses them of continuing the same predatory practices.  From this amazing article:

If you have a merchant credit card such as a Best Buy card, or any HSBC credit card, you may find yourself at risk. The question is ‘Who Does HSBC Hurt Financially’. Worded another way people want to know how HSBC picks their targets. Which families get lower credit scores after dealing with HSBC? Which people with HSBC credit cards head for financial ruin? The answer is that HSBC, through HSBC Finance Corporation, targets people by opportunity, not by their credit score.

Trend analysis shows a ’slaughter window’ which is defined as anything within one week of a balance due. Just like the battlefield, HSBC Finance sends customers to the slaughter window by sending letters indicating when their interest free period is about to end. The shady part of these notifications is they DO NOT get to the customer until it is too late. In cases where the customer calls for a pay off HSBC simply lies to the customer! Lying comes in two or more formats, as shown below in a real life true example.

You need to know that HSBC Finance was once stained, sullied, embarrassed and bottom dwelling predatory lender Household International. Answers come into focus. In the past HSBC would quote a payoff, add $15 for a phone payment, take the payoff and the following month they would bill the customer for $15 plus all the interest due – a questionable and shady tactic at best. The customer did not know to add $15 more to the quoted payoff. Welcome to HSBC’s slaughter window. Today HSBC adds the $15 as a new purchase, further clouding the problem. Like leading customers to slaughter a combination of notices that arrive late and additional charges puts one at a disadvantage. Then consider the fine print of the HSBC Finance Corporation contract and there is little one can do.

They were accused of hounding soldiers in Iraq and of  adding late fees before the deadline occurs. Another quote from the home page:

Many of HSBC’s problems stem from their purchase of predatory lender Household International. That is why we started watching HSBC. There were very few changes at the old Household International, now called HSBC Finance, and that is the responsibility of HSBC corporate decision makers. “They sit on checks until a late fee kicks in,” Eggert said. “Then you do what they call pyramiding: When the next payment comes in, they apply it to the late fee and say the borrower didn’t make a whole payment. And then they collect more late fees or foreclosure fees.”

March 1 Update #2. Consumer Affairs lists these complaints from American consumers about HSBC credit cards.

April 15, 2010. Sorry for not updating! Last year I reached a settlement with HSBC that I am happy with. I think the settlement provided redress for my complaint and compensated me for my time and inconvenience. See my Tips for Handling a Dispute with a Credit Card Company.