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Are you on active duty in the Army, Navy, Air Force, Marines or Coast Guard? Are considering financing with or getting a credit card from Best Buy? HSBC or Household International? One of the over 60 merchants at the bottom of this page? Please read these articles before making your decision.

If you need to teach a class, block of instruction, or financial planning of any kind, consider "The History of Predatory Lending." You have access to this 20 page lesson plan. It is complete and ready to teach with today. You can open it and print it without putting any information on a government computer. See our downloads section for this free download.

There are consumer complaints from active duty military personnel. Please check them carefully before making a decision.

"Lurking behind these supposedly settled truths is the platonic assertion that good character is a firm wall between a good person and evil acts, regardless of the betrayals of "what's right" and other blows, such as bereavement that may simply happen to an adult. Often there is the invisible unstated assumption that those that hold power in society exhibit loyalty and care in fulfillment of themis. (p 32)

"If military practice tells soldiers that their emotions of love and grief - which are inseparable from their humanity - do not matter, then the civilian society that has sent them to fight on their behalf should not be shocked by their "inhumanity" when they return to civilian life. (p 67)

"Viet Nam narratives reveal that the events that drive soldiers berserk are betrayal, insult, or humiliation by a leader; death of a friend-in-arms; being wounded; being overrun, surrounded, or trapped; seeing dead comrades who have been mutilated by the enemy; and unexpected deliverance from certain death." (p 80) Achilles In Viet Nam - Combat Trauma and the Undoing of Character, Jonathan Shay, M.D., Ph D.

Even in families without children parents are leaders. Parents make financial decisions that impact the future of their children, their stature in the community, self worth, and dignity. There is nothing dignified about the effects of predatory financing. Yet there is an initial assumption that those who impact the credit scores of Americans are exhibiting loyalty and care in fulfillment of their chosen occupation. Americans believe our laws and regulations such as regulation "Z" protect their rights. There is a strong belief that the system will work.

The economic downturn of 2000 through 2002 is firmly grounded in consumer spending and consumer debt. The real estate boom infused more disposable income into the economy. Exportation of manufacturing and services sector jobs to foreign countries, plus the huge trade deficit add to our woes. In early 2003 the federal budget deficit and the threat of war add to troubled economic times. Bankruptcies achieved record high levels. However, as with history and military battles, we must learn from the past to see the future and prevent future mistakes.

William F. Aldinger started his career with CitiGroup, learning quickly that sub-prime financing in the CitiFinancial subsidiary was a lucrative business. After leaving Citi, Aldinger went to Wells Fargo, and then to Household International as CEO. All three companies are now classified as predatory financing companies, and all three have been forced to settle with the states, government, and consumers. Household restated earnings for the entire time that Aldinger was with the company. HSBC has a four year agreement with Aldinger to continue as Chairman and CEO of Household under HSBC, and then he will become chairman and CEO of HSBC North America, Inc and director of HSBC Holdings. The past tells us the future. HSBC contends that there will be no changes to their business model. Therefore it is safe to predict that HSBC will become the largest global predatory lender ever witnessed by a civilized orderly society.

Those that managed to delude themselves into thinking they are financiers providing a service to society, while masquerading as predators, argue that they are servicing a sector of society that would otherwise not receive adequate attention. Countering that argument, the Community Reinvestment Act perhaps should be revisited and strengthened. Perhaps federal and state governments should remove predatory abilities from the private sector while providing structure and funding. Americans should not be abused by a system that is failing. Historically, if we use the actions of predators to show us what areas need reform we can reverse the economic downturn we see today. Just like gangs, organized crime, and similar activities, the government should look for the cause of the problem while instituting prevention and removal of the opportunity for predators.

Credit cards are responsible for a huge portion of American debt. Easy credit and the need for credit is expected in today's society. Again predators have an opportunity. Household International provides financing for, and ongoing compensation to merchants under their existing contracts. Again, there is an initial assumption that those who impact the credit scores of Americans are exhibiting loyalty and care in fulfillment of their duties, that they will follow Fair Credit Reporting and Fair Credit Billing, etc. With over twenty million transactions a day, and over sixty participating merchants, Household International impacts the lives and family values of many taxpaying Americans every day.

Consumer watchdog organization Household Watch receives consumer complaints daily. Based on their web site log statistics Household Watch only receives complaints from 5% of those who visit. Many others get the information they need from their web site data. Over 500 people per day use the Household Watch web site to find links which enable them to pay their bill online. These links are not otherwise directly available from Household International, through Google and AOL search engines, which means they are not otherwise available to 70% of all Internet users. The Federal Trade Commission, therefore, recognizes Household Watch and sister site BestBuyCard as a source of consumer help. Where predators see an opportunity, we said earlier that the government should step in to stop them. When the government does not step in, consumer organizations step in to fill the gap. We sincerely hope, therefore, that the consumer organizations will be heard a loudly as the predators and the government when decisions are made. They speak for the public, with emphasis on the public that experiences violations of regulation "Z" and other areas where they expected special trust and confidence.

Reported to Household Watch: We purchased a computer from Best Buy. It was financed through HRS (Household Retail Services). We never received a bill. When one of their representatives contacted us on the telephone, we discovered that our bills were being mailed to an address in another state. They promised to correct the error last month and mail us another bill. To date (11/19) we have not received a bill. Last night they called when my wife was home and they were quite rude about it. I am trying to return their call but cannot find a telephone number for them (the local Best Buy put me on hold and then hung up on me).

If Household doesn't tell many people about their web site and they can't actively put it in Google and AOL search engines, then not many people will find it. Then the interest comes due, the $29 late fee applies, and a telephone payment is $10. At $39 per account, and 50,000 accounts per month, that's almost two million dollars a month, and that doesn't count the interest! As soon as Household declares the account past due, all interest is due as well, even if it was a "no-interest" for X number of months agreement.

The HRS-USA web site says: "On average, we process more than 20,000 new credit applications per day, delivering credit decisions in under ten seconds. In total, we handle more than three million transactions per day." (source http://www.hrsusa.com/ecaj0060.html)

In a 30 day month they average 600,000 new accounts. With errors on 9% of new accounts, Household could theoretically make $2 million just on the fees. But what happens to the customer's credit report? What happens to the FICO score? This is not right. Analysts estimate the total revenue from "mistakes" could be over $12 million a month. Take away the human factor, and with better training and skilled supervision, the online payment web site for HRS will cost the company $144 million per year. This estimate is based on a $1000 account. No wonder www.bestbuycard.net and www.householdwatch.com get so much traffic.

It is human to make "mistakes" but it crosses the line and becomes predatory when consumer complaints demonstrate a clear and willing desire to violate Regulation "Z" every day. The example is based on late fees and telephone payment charges, but does not include interest. Similar to the $484 million settlement from Household HFC subsidiary, how long does it take to make enough money to offset any potential fine when they get caught? This is a calculated risk that Aldinger and company already factored into the equation. Reports date back to 1996. Including interest, Household made over $1 billion excluding interest, and with interest the total zooms to over $5 billion. How much will the government fine them for this? $484 million more? It is negligible, and the consumer pays a very high price.

These are not sub prime mortgage customers. Perhaps this is a young child establishing credit, a family buying a refrigerator at Best Buy, a new bride buying a bridal gown at David's Bridal, or a family buying furniture at Room Store. These are average Americans that need the protection of anti-predatory lending laws, enforcement of Regulation "Z" and the contributions of watchdog organizations. These are real people that expect fiduciary responsibility from the merchant and professionalism from the merchants financing program. When they are told they can't make a payment at the store, and the merchant benefits from "ongoing compensation" the merchant benefits if the consumer must pay late, pay a telephone payment charge, pay the interest due on an interest free plan, or pay a $29 late fee. To the average American "ongoing compensation" is perceived as a kick back to the merchant for kicking the customer in the teeth.

I contend that there is no conspiracy against the American consumer, but rather a calculated financial plan where profit taking far exceeds the fine when caught. Household International plays with federal and state governments and the consumer with grave consequences to the consumer but little impact to Household International. Regulators get a settlement while Household admits no wrongdoing and leaves the table smiling, while playing the regulators like a fine violin. To compensate HFC customers the $484 million settlement should have been $17.5 billion, and there is still no compensation for losing one's home. Compensation for the securities suit should be in the billions, but there is no compensation for those that lost their retirement. Compensation for the merchant suits (HRS) should be in the billions, but there is no compensation for loss of human dignity and self esteem.

When one reads the opening paragraphs, one reads "being trapped, betrayal, humiliation, being surrounded" contrasted with terms such as "loyalty, dignity, self worth, and self esteem." When asked why I began with such a long quote from Dr. Shay, I reference the feelings of the average American, of any age, that fell victim to Household's predatory financing, either through a store credit card such as Best Buy, or an HFC loan with a huge balloon payment. War is a calculated risk. Government regulation is a calculated risk. Today's economy is the result of CEO mismanagement as demonstrated by Enron, WorldCom, and others, combined with the impact of predatory financing that fails to hold the financial sector responsible for their actions and the subsequent backlash resulting from their actions. HSBC already stated their position, did due diligence, and they have a calculated risk on the table. Aldinger already tasted blood, and has his calculated risk grinding away on the flesh of the consumer. To this day we receive consumer complaints from our troops in the Middle East. As they prepare to fight for this country their requests for relief under the Soldiers and Sailors Civil Relief Act are denied, late charges accrue, interest is due and their FICO score is going down. All from a simple Best Buy or Levitz credit card. All for an extra dollar.

The above is an excerpt from a letter to the OCC written by a retired Marine

This is just one of our articles referencing HSBC complaints about mortgages, Bestbuy, credit cards, auto loans, fees, and late payment processing.

Author's Note: Don't forget to visit the Action Engine for help, downloads, or to search for more articles like this. HSBC Watch gives you more than just articles. Send us your complaint using the live help system at the bottom of each page

Notes

 

HSBC Watch monitors HSBC customer trends for possible violations of Regulation Z and other possible illegal actions. We use your individual HSBC complaints and merchant complaint reports to perform trend analysis. We are not associated with HSBC, Household International, or their merchants. Some items are used by permission granted in the Fair Use guidelines of the 1976 U.S. Copyright Act. HSBC Watch was formerly known as Household Watch is now part of the Lender Watch network

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