A $23.5M settlement has received preliminary approval from a federal judge
in Philadelphia in a class action lawsuit against HSBC Bank,
Esslinger v. HSBC Bank Nevada N.A. The bank has been accused of using deceptive tactics to sell payment
protection plans to its customers.
If granted final approval, the settlement would be the fourth of its kind
nationwide against credit card companies over payment protection plan
schemes. The service supposedly is intended to provide customers with
a way to defer payments under certain circumstances. Card companies typically
charge 89 cents for every $100 of their credit balance. However, not everyone
is eligible for the program, including those who are self-employed, are
seasonal employees, those who are over the age of 65, and retirees. The
lawsuit noted that customers are never asked if they fall into any of
these categories when the credit card company is trying to sell the plan,
but that they will still accept the money.
Golomb & Honik, P.C. is one of three lead counsel in this case. They
and other firms have successfully reached settlements in class actions
in Illinois ($10.5M against Discover) and Florida ($20M against Chase
and $60M against Capital One) alleging similar misconduct. Golomb &
Honik, P.C. is one of several firms that have sued the nation’s
largest credit card companies over the past 3.5 years. While many of these
cases did not take long to settle, negotiations have become more difficult
in some of the cases since the Supreme Court ruled that mandatory arbitrations
in class actions were acceptable under the Federal Arbitration Act.
Attorney Golomb has said that while not an issue in the HSBC case, some
other defendants are fighting for arbitration in other cases before circuit
or district courts.
In this case, potential class members total 11 million, split into three
groups. According to Attorney Golomb, the group that stands to make the
most money from the settlement include those who were ineligible under
the terms of the payment protection plan who were charged for services.
The second group includes those who were “tricked” into signing
up for the service when they were talked into it while trying to activate
a new credit card. The third group is comprised of those who did sign
up for the plan, but wish they had not now that they know how it really works.
Court documents indicate that the bulk of payouts will be between $15 and
$60 per customer, with no class member receiving more than $150.
Julia B. Strickland of Stroock & Stroock & Lavan represents HSBC
in the case. The plaintiffs are represented by Golomb & Honik, P.C.,
Taus Cebulash & Landau of New York, and Nagel Rice of New Jersey.