Household HSBC Watch

Is HSBC North America in worse financial shape than previously suspected? An analysis of customer complaints for the first two months of 2005 focuses on HSBC Finance Corporation, which really is the previously troubled predatory lender Household International. Delays in processing payments well outside the guidelines prescribed in FDIC Regulation Z suggest possible padding of the books. As a result, additional interest, late fees, finance charges, and telephone payment charges are billed by the company, although perhaps illegally. Combined with the fact that thousands of customers report the inability to access their online payment website and one has the warning signs of a company desperate for profits at any cost. Reputation aside, when consumers are bound by oppressive arbitration clauses, these red flags and warning signs signal a need for intervention by the Federal government. Watchdog organization Household - HSBC Watch recently said there is no way HSBC Finance Corporation can pass a forensic accounting by investigators.

Sir John Bond and Stephen Green of HSBC Plc said “Household has the opportunity to be a benchmark of quality. We want it to be a responsible business helping set the standard for the industry.” The facts described above, all of which got much worse in 2005, damaged HSBC’s reputation and ruined any hope of quality and standards. Predatory tactics were not enough to generate enough profits to save William Aldinger’s job, forced into early retirement due to factors which have not yet made it to the press corps and the general public. It is the opinion of some analysts that HSBC North America is jeopardizing the integrity of their merchants, the largest of whom is consumer electronics leader Best Buy, as the merchants receive “ongoing compensation” which is a percentage of the amount collected by HSBC.

As merchants monitor the performance of their private label credit card processor they are aware of performance issues. When predatory tactics are used against the consumer to raise revenues, one must review the definition of racketeering and corrupt organizations (RICO) by consulting another case against HSBC (Household - Beneficial) for such definition. In ruling on the RICO claims, the court held that the complaint adequately pled that the H&R Block and Beneficial defendants “operated a scheme to defraud customers, distinct from the other ordinary business dealings each conducted, whereby Block would attract and mislead customers into purchasing extremely expensive loans from Beneficial in exchange for a cut of the profits.”

If William Aldinger set the stage for RICO action against HSBC Finance Corporation and over 60 of their merchants while violating FDIC Regulation Z, and if the company is vulnerable to another RICO action resulting from Shea v Household, and the company already has a RICO case against them in the Beneficial and H&R Block action, it does not look good for HSBC. Add countless delays in processing mortgage payments, as has been reported to the OCC, and intelligent minds question whether Household International was profitable for Sir John Bond. London had their heart set on Household’s seemingly profitable credit card business. If brought into compliance and forced to meet industry standards, however, merchants will see a huge drop in profits received through “ongoing compensation.” Fearing a RICO suit which would forever tarnish a merchant’s reputation they would jump ship due to reputational issues alone. Said action would leave Sir John Bond with egg on his face and HSBC shareholders would be up in arms.

With consumer advocates in the United States constantly reminding Americans that HSBC Finance Corporation is the new name for former predatory lender Household International, simply having the HSBC logo does little to fool the average consumer. Those who wish to be fooled have a rude awakening when they fail to receive their statement and cannot pay their bill online. As they search the Internet for answers their horror is obvious. The question then becomes how to tell their family and loved ones of the devastation which lies ahead.