According to reports, New York Supreme Court Justice Eileen Bransten agreed to the $30 million settlement, which affects HSBC customers who received one or more overdraft fees after transactions in their account were reordered. Lawsuits filed against various financial institutions allege the defendants reordered transactions from highest dollar amount to lowest in an attempt to push customers into overdraft more quickly, thereby increasing the number of transactions that result in an overdraft fee.
In addition to the state lawsuit, HSBC also faces federal lawsuits filed by plaintiffs who allege they were harmed by excessive overdraft fees. Plaintiffs in the federal lawsuits have reportedly argued against the $30 million state settlement, claiming the plaintiffs in the state settlement manipulated the litigation process. They argue that the settlement does not consider any interest plaintiffs would be entitled to if they won their lawsuit.
In approving the settlement, however, Justice Bransten said that even with interest the $30 million proposed settlement would cover enough of the damages to make the settlement reasonable.
Initially, Justice Bransten said she would not rule on the settlement while the federal lawsuit was ongoing, but a ruling from US District Judge Arthur D. Spatt indicated the state settlement could move forward.
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The HSBC lawsuit is In re: HSBC Bank USA NA Checking Account Overdraft Litigation, case number 650562/2011, in Supreme Court of the State of New York.