Lawsuits filed in the U.S. against units of HSBC Holdings PLC charge that the lender's credit card payment-protection service defrauds disabled, retired and unemployed consumers.
Complaints filed July 2 against HSBC in federal courts in Philadelphia and Camden, N.J., say the service purports to safeguard accounts by suspending or canceling required minimum payments when customers become disabled or unemployed, but the circumstances that activate protection are "varied, complicated and always changing."
The service "is designed to prey on the financially insecure and is virtually worthless because of the numerous restrictions that are imposed," the complaints allege.
The complaints charge that the bank enrolls people before sending them small-print restrictions that are "incomplete, indecipherable, misleading and obfuscatory."
The plan, which costs $1.35 for every $100 of cardholders' balances at the end of each month, excludes the self-employed, part-time workers, retired people and those who are already unemployed or on disability, according to the lawsuits.
HSBC spokeswoman Kate Durham said the London financial company does not comment on legal matters.
The Camden complaint, brought by Marilyn Rizera in U.S. District Court for the District of New Jersey, said HSBC Bank USA Inc. and HSBC Card Services Inc. are violating the New Jersey Consumer Fraud Act and engaged in breach of contract.
The Philadelphia case, brought by Edward T. Esslinger, Gloria Glover and Adrath Rogers in U.S. District Court for the Eastern District of Pennsylvania, said the bank is violating the Pennsylvania Unfair Practices and Consumer Protection Law.
Both sets of plaintiffs seek to proceed with group lawsuits.
"Payment Protection is so confusing as to when coverage is triggered, so restricted in terms of the benefits it provides to subscribers and processing claims is made so difficult by HSBC, that the product is essentially worthless," the Rizera complaint says.
The Rizera complaint says that she is disabled and that she enrolled in the payment-protection plan in January 2009.
Rivera has never held a job, and HSBC never inquired into her employment or disability status before enrolling her in the service, the complaint says.
"Her credit card account is still charged for payment protection every month even though she is virtually ineligible to collect payment-protection benefits," the complaint says.
