HSBC stands accused of “defrauding” US military personnel, some of whom are on duty in Iraq, by overcharging them on high interest loans, according to a study out today from a leading US-based human rights group. Inner City Press and its Fair Finance Watch, based in New York, has uncovered the potentially damaging evidence from documents obtained under the Freedom of Information Act.
It reveals letters from soldiers, and their wives, which allege that HSBC subsidiaries in the US are flouting rules under the Servicemembers’ Civil Relief Act requiring them to cap interest payments on outstanding loans at a maximum of 6% per year “during any part of the period of military service”.
However, one letter obtained by Fair Finance Watch, dated September 11, 2003, from the wife of a US Marine to the Comptroller of the Currency in Houston, Texas, and copied to Household, details a request for “relief from our creditors” under the act.
She added: “Household Bank has not responded to my request and has closed the account. They have now turned it over to a collection company. “My husband joined the Marines to protect this country and is being punished for doing so by Household Bank.”
HSBC bought US consumer credit group Household International for £8.2bn in November 2002.
Documents uncovered by Fair Finance Watch show that HSBC has attempted to narrow the terms of the SCRA to only those serving “in a hostile zone”, rather than, as stated by the act, “during any part of the period of military service”.
The study reveals one letter, dated May 20, 2004, to the Department of the Treasury in Washington outlining the case of one soldier who was deployed on September 23, 2003.
His creditors were contacted informing them of his deployment, and that he was seeking relief on his interest payments under the SCRA. It states: “Other creditors have lowered his APR to 6% and have credited back the difference along with any other charges from September 23, 2003.
“All phone calls and faxes from (February 26, 2004) have been ignored, misplaced, and denied by Household Credit Services (owned by HSBC).” It also alleged that one customer service representative said the soldier’s request could not be used in accordance to the SCRA and “unless the soldier was in a hostile zone, the lowering of the APR would not be enforced”.
Another letter from the wife of a soldier, that has been obtained by Fair Finance, raised a similar complaint.
She said each one of their creditors had placed their accounts under the act and lowered the interest rate to 6%, except for Household Bank. The soldier’s wife added: “Household Bank told me that my husband’s re-enlistment was only a ‘formality’ and that they are not going to honour the act or my request to have our account placed at 6%. They continue to charge us at 15.9%.”
An e-mail obtained by the human rights group details the story of a soldier who was deployed on Operation Iraqi Freedom. He became so exasperated in his dealings with Household, he wrote an e-mail to his senator requesting assistance. On four occasions the soldier allegedly sent the bank his mobilisation orders, a letter from his commanding officer, plus other official documentation to prove he was mobilised on October 16, 2004. But, he said, the bank “continue to harass me via internet for payment”.
He added: “They tell me that I owe $30 and from October they have charged me an inflated interest rate and given me late fees. They actually owe me money from the two accounts since they had not ever reduced my interest rates nor stopped the fees.” The soldier signed off the e-mail: “Thank you so much… Your soldier in arms.”
A HSBC spokeswoman last night told The Herald the bank had not seen the Fair Finance Watch study, but added: “HSBC works hard to abide by the letter and spirit of any regulation that applies to it and treat our customers fairly and respectfully at all times. “We take any allegation very seriously and will, of course, look at any complaint.”
From Household – HSBC Watch: “We receive similar emails and online complaints. We have a dedicated military “horror story” section outlining similar problems with Household International and HSBC. There is no doubt allegations in this report are true and factual. We perform trend analysis and trends do not lie. We constantly object to HSBC’s involvement with UMUC (University of Maryland) since UMUC is also a defense contractor. We constantly object to HSBC’s involvement with the U.S. military since we know it is a sham, as outlined in this report.” See More
In addition to fighting HSBC and Household International, here is a report which is near and dear to our hearts:
Congressman Calls It ‘Financial Friendly Fire'; Military Blames Payroll Errors
By BRIAN ROSS
April 26, 2006 — – Hundreds of soldiers wounded in battle in Iraq have found themselves fighting off bill collectors on the home front, according to a report to be released tomorrow. The draft report by the Government Accountability Office, which ABC News obtained, said that hundreds of wounded soldiers had military debts incurred through no fault of their own turned over to collection agencies.
“Financial friendly fire,” said Rep. Tom Davis, R-Va., chairman of the House Committee on Government Reform. “Because their financial records are so bad, this is a friendly fire where we are hurting and wounding our own.”
Army specialist Tyson Johnson of Mobile, Ala., had just been promoted in a field ceremony in Iraq when a mortar round exploded outside his tent, almost killing him.
“It took my kidney, my left kidney, shrapnel came in through my head, back of my head,” he recounted.
His injuries forced him out of the military, and the Army demanded he repay an enlistment bonus of $2,700 because he’d only served two-thirds of his three-year tour.
When he couldn’t pay, Johnson’s account was turned over to bill collectors. He ended up living out of his car when the Army reported him to credit agencies as having bad debts, making it impossible for him to rent an apartment.
“Oh, man, I felt betrayed,” Johnson said. “I felt like, oh, my heart dropped.”
Payroll Errors, Says Military
And there are many more like Johnson. Staff Sgt. Ryan Kelly lost his leg in a roadside bomb attack in Iraq.
He didn’t realize it, but the Army continued to mistakenly pay him combat bonus pay, about $2,000, while he was in the hospital rehabilitating, and then demanded that he pay it back.
He, too, was threatened by the Army with debt collectors and a negative credit report.
“By law, he’s not entitled to the money, so he must pay it back,” said Col. Richard Shrank, the commander of the United States Army Finance Command.
The Army said it moved wounded soldiers out of the battlefield so quickly its accounting office could not keep up, resulting in numerous payroll errors.
“This is no way to win a war, I can tell you that,” said Davis. “You’d think after four years after fighting a war in Iraq, the government would have its act together.”
But the Army said it is now trying to correct the problem. Since ABC News first reported on the plight of soldiers, featuring Johnson and Kelly in a “Primetime” investigation in October 2004, the Army has forgiven most of their debts.
But Davis said there may be thousands more whose thanks for putting their lives on the line has been a knock on the door from a Pentagon debt collector.