HSBC, “The World’s Local Bank,” is getting a lot of local and state-wide criticism today as suits are being filed against them for their poorly explained and ill-marketed “Payment Protection Plan”. Those especially impacted by this were wrongfully targeted and unqualified recipients of this plan including, retirees, people already on disability and part-time employees. – Source
As an HSBC card holder I’m all too familiar with this offer. It seems like every other week I get an e-mail or a message in my account inbox for the opportunity to “freeze or cancel the balance on this account” should a “covered event” occur.
HSBC claims they will cover:
Short term and long term Involuntary Job Loss
Temporary and Permanent Disability
and more Covered Benefits
And Much More
Long Term Involuntary Unemployment
Loss of Life
To hear the pitch of the plan that can be heard via the HSBC Customer Service line play the video below.
“Personal Account Protection is only $1.35 per $100 of your statement ending balance each month. You owe nothing when your statement ending balance is zero!”
Shelling out only $1.35 per $100?? That’s often less than a small coffee! You can handle that, right? While this seems like chump change at first, it certainly adds up. For example, if you hold a balance of around $15,000 on your card your monthly charge for this protection alone would be $202.50. That’s $200 owed on top of your monthly payment towards the debt!
My personal favorite part of the fine print in the agreement is when discussing the cost of the plan you have to acknowledge that you, “will be conveniently charged” for the amount. I’ve never understood any bank, phone company or cable provider’s delusion of “convenience”. To me, convenience is finding a cookie in proximity to my glass of milk, not a creditor reaching into my wallet once a month.
Personally, I’ve never been enrolled in this “convenient” service either by choice or forceful enrollment but the same cannot be said for some of HSBC customer’s.
Recent events and federal class action suits claim that card holders are being enrolled in this “virtually worthless” plan “without notice and solicits retirees and disabled people to pay for the plan knowing they do not quality for its benefits.” In this case it is claimed that HSBC is violating the Illinois Consumer Fraud Act by not disclosing the terms of the Protection coverage before enrollment. It is alleged that this plan should be subject to insurance regulations but is not considered an ‘insurance’ plan through the bank. The class action suit involves more than 100 class members and “possibly hundreds of thousands of individuals who were HSBC customers throughout the State of Illinois who are geographically dispersed such that the joinder in one action would be impracticable.” – Source
The Payment Protection plan is marketed throughout direct mail and telemarketing which has been seen by many to be a deceptive and misleading process and plan. By charging for enrollment into this plan, “known as ‘slamming’,” HSBC allegedly violates Illinois’ statutory and common law. In the recent class action it has been said that, “every slamming victim was enrolled without their consent. That is, they did not agree to contract with HSBC for Payment Protection and did not assent to pay for Payment Protection, regardless of the terms and conditions of the plan.” – Source
HSBC markets this product with the catch phrase, “In Good Times And Bad, We’ve Got You Covered.” The service’s purpose is to freeze or cancel required minimum payments and interest should a major life event occur. In return for the service customer’s contribute to the monthly fee for the protection. However, for some customer’s the plan has been “unilaterally imposed” upon them. For others, “no written materials explaining the terms and conditions were ever provided to subscribers.” – Source
According to the lawsuit filed, it is alleged that “HSBC does not make any effort to determine whether subscribers become ineligible for Payment Protection benefits after the plan is sold. Accordingly, when subscribers’ employment or health statuses change, they will continue to pay for the product even though they may no longer be eligible for benefits under the plan.” Supposedly HSBC has increased profits by millions of dollars with this approach and product that essentially provides zero benefits to some enrolled. – Source
As a consequence, HSBC bills thousands of retired persons (many of whom are senior citizens), along with the unemployed, self-employed, part-time or seasonal Illinois residents, as well as disabled individuals, for Payment Protection coverage, even though their employment or health status prevents them from receiving benefits under the plan (and will not refund the Protection premiums after denying a customer for a claim). – Source
“According to the written materials which are only provided after the subscriber has already been enrolled in the plan, the following restrictions on Payment Protection are imposed, but because they are in small print and in incomplete, indecipherable, misleading and obfuscatory language, are not readily comprehensible to consumers:
- a. Payment Protection benefits do not apply to persons self-employed or not employed;
b. Payment Protection benefits do not apply to persons employed part time or seasonally;
c. Payment Protection benefits do not apply to retired persons;
d. Payment Protection benefits do not apply for the first 30 days of unemployment or disability;
e. Payment Protection benefits do not apply unless you initially qualify for state unemployment benefits or have received an employer severance agreement;
f. Payment Protection benefits are limited to 9 months for “unemployment” and 18 months for “temporary disability;”
g. Payment Protection benefits do not apply unless you notify the company within 180 days of the Event and provide Verification within 90 days of notification.
h. Subscribers cannot use their credit card for new purchases while Payment Protection benefits are being provided;
i. Payment Protection coverage is limited to one benefit approval per calendar year; and
j. Payment Protection benefits require monthly certification by a physician for the duration of the injury or illness.” – Source
Apparently, if you were to call an HSBC call center to proceed with a claim over the phone the employees are given authority to deny claims immediately yet not able to approve them over the phone. The entire plans appears to be a “contract of credit insurance” and it’s been claimed that HSBC, “does not call it insurance to duck state insurance regulations.” – Source
HSBC knows that for those subscribers who choose to pay for Payment Protection, few will ever receive benefits under the plan and even for those that do, the amounts paid in “premiums” will usually exceed any benefits paid out. – Source
“As a result of HSBC’s actions which constitute unjust enrichment, Plaintiff and the Class suffered actual damages for which HSBC is liable. HSBC’s liability for those damages should be measured by the extent of its unjust enrichment.” – Source
Folks, for your convenience, be sure to double check those credit card statements for extraneous charges in case you happen to be enrolled in a plan you do not wish or need to be enrolled in. If you have been enrolled in a service like this but were never provided with written material, checking your statements is the only way to know if you’re being charged for a plan like this.
As always…Stay educated. Stay strong. Seek help.
For additional information contact Miller Law, LLC. 115 S. LaSalle Street Suite 2910 Chicago, IL 60603 (312) 332-3400