I told them all at the very first meeting it was illegal
March 22, 2015 7:25 AM   Subscribe

An estimated billion pounds worth of HSBC fraud in Britain. According to whistleblower Nicholas Wilson, HSBC has been involved in a fraudulent scheme to illegally overcharge British shoppers in arrears for debt on store cards at leading British high-street retailers.
The credit agreements did not allow consumers to be charged debt collection fees. The chain of lenders involved in HSBC's debt recovery includes retailers up and down the UK, but most often those in the poorest areas. Wilson estimates that as many as 600,000 people have been defrauded, mostly those on a low-income.
This fraud has (allegedly) been systematically covered-up by regulators, police, law firms, the government and much of the UK media. The full list of media organisations that have investigated, then spiked, Wilson’s story, despite its unprecedented importance and public interest value, includes BBC Panorama, BBC Newsnight, BBC Moneybox, BBC Radio 5 Live, The Telegraph, The Guardian, Private Eye, and The Sunday Times.
posted by Lanark (22 comments total) 34 users marked this as a favorite
 
Didn't HSBC start life as a drug laundering operation, handling opium profits from HK to Britain? Little wonder they're a criminal organization.
posted by five fresh fish at 7:36 AM on March 22, 2015 [8 favorites]




An appropriately rubbish random photo of the HSBC logo

Caption of my heart
posted by chavenet at 7:47 AM on March 22, 2015 [2 favorites]


Private Eye publishes highly critical stories of HSBC with wanton glee. If they spiked a story about that bank it could only be because they were warned off it.
posted by Thing at 7:58 AM on March 22, 2015 [9 favorites]


HSBC more-or-less got away with money laundering for South American drug cartels, so not just starting life. I'd characterize it as an ongoing criminal enterprise. Obviously, they've been doing this particular fraud with the blessing of the government, so nothing will happen this time, either. I'm surprised they even bothered to hide it.
posted by dirigibleman at 7:59 AM on March 22, 2015 [4 favorites]


They are organized criminals and should be treated as such. You don't fine the mob.
posted by Drinky Die at 8:07 AM on March 22, 2015 [10 favorites]


Heh, here in the US the banks themselves usually follow the contract pretty closely. Easy to do since they can change it any time they think up a way to make it more favorable to the bank.

It's the junk debt buyers who happily add half again as much to the account balance without any explanation whatsoever and then sue on the fraudulent balance, but without bothering to properly serve the defendant. Once a default judgment is entered, the debtor is pretty much fucked. Never mind that the amount owing is incorrect and that there wasn't actual service. In most states the judges that hear these cases don't give two shits about following procedure. You'd think they might wonder why better than nine out of ten defendants never show, but they don't.
posted by wierdo at 8:19 AM on March 22, 2015 [4 favorites]


Hey, organized criminals or corporations, sometimes it's hard to tell the difference.

Especially when the prey on the poor.

(I'm looking at you, payday loan companies. )

I'm sure this will be found to be all on the up and up.
posted by BlueHorse at 8:23 AM on March 22, 2015 [1 favorite]


Lets not forget that HMRC routinely sits down with serious criminals over 200 quid lunches and negotiates down their massive unpaid tax evasion bills to pennies on the pound with no criminal penalties despite clear criminal intent. The British government is both in cahoots with and terrified of major financial criminals.
posted by srboisvert at 8:44 AM on March 22, 2015 [4 favorites]


The venn diagram between corporations and criminals is almost a circle.
posted by mrgroweler at 8:48 AM on March 22, 2015 [12 favorites]


The British government is both in cahoots with and terrified of major financial criminals.

In both the UK and US there's a constant revolving door between the two - I don't think they can plausibly be considered separate entities anymore. The law clearly does not apply to you in either country once you've achieved a certain level of power and wealth. Maybe it never has.
posted by ryanshepard at 9:07 AM on March 22, 2015 [6 favorites]


Weird/ depressing link with the Graeber post from earlier.
posted by rudster at 9:07 AM on March 22, 2015


I'm not clear on why he thinks The Guardian would cover the Swiss bank fraud by HSBC but not this supposed fraud. Unless I'm misunderstanding, the alleged reason for The Guardian not reporting the consumer credit fraud is their advertising revenues. But why wasn't that relevant when reporting of HSBC's Swiss bank fraud?

Private Eye publishes highly critical stories of HSBC with wanton glee. If they spiked a story about that bank it could only be because they were warned off it.
By whom? I don't get it. And how does Wilson know that Private Eye had a story print ready? Or any other publication for that matter?

Here's the minutes of the select committee meeting BTW. The last statement from Martin Wheatley does seem pretty damning.
posted by chill at 11:06 AM on March 22, 2015 [2 favorites]


Private Eye tries very hard to not print stories that aren't true, but does try very hard to print stories that are true even if there's a risk of an expensive court case. It certainly doesn't pull stories because advertisers ask. It doesn't need to, because it's not beholden to any one advertiser, and if it did and it came out - which it would, as plenty of people really dislike the Eye and wish it harm - then it would be far more damaging.

Plus, Hislop hates bullies.

So, if the story 'got spiked' then I wouldn't assume it was because the Eye had been got at.
posted by Devonian at 11:42 AM on March 22, 2015 [5 favorites]


I am doubling down on the praise for Private Eye. I find it hard to believe they would bend to that kind of pressure. As mentioned, they don't care about the advertisers and they take great pride in gleefully attacking exactly this kind of thing. Either there is less to this than it appears from this, or Private Eye wrote about it already so long ago that no one remembers (it's remarkable how often this happens with the Eye, and the rest of the UK papers catch up years later ... something else the Eye gleefully points out at every opportunity.)
posted by chavenet at 11:57 AM on March 22, 2015 [5 favorites]


By whom? I don't get it. And how does Wilson know that Private Eye had a story print ready? Or any other publication for that matter?

I don't know. I just tend to think that Private Eye would publish it unless they knew something more. I suppose it falls into two possibilities: there isn't as much to this story as seems, or there's so much more. I think the latter is unlikely, all said, but I can't shake the feeling that such a thing is possible.
posted by Thing at 12:44 PM on March 22, 2015


"You don't fine the mob."


"And hence when by their foolish thirst for reputation they have created among the masses an appetite for gifts and the habit of receiving them, democracy in its turn is abolished and changes into a rule of force and violence."

-Polybius
posted by clavdivs at 2:42 PM on March 22, 2015 [2 favorites]


Yeah, if Private Eye wont publish it, I'd say its likely they've got good journalistic reasons. Like insufficient evidence or dodgy evidence.
posted by memebake at 2:42 PM on March 22, 2015 [1 favorite]


Aha, Private Eye did publish it, on 18/Mar/15, but Mr Wilson is saying that they could have published it in 2013 but didn't for some reason.
posted by memebake at 2:50 PM on March 22, 2015 [4 favorites]


Hard to know what to say about this. You can't punish the criminal behaviour, because (allegedly) the entire global financial system relies on it?

I don't buy it, but I don't know enough about finance to propose an alternative.
posted by His thoughts were red thoughts at 3:10 PM on March 22, 2015 [2 favorites]


Heh, here in the US the banks themselves usually follow the contract pretty closely. Easy to do since they can change it any time they think up a way to make it more favorable to the bank. It's the junk debt buyers who happily add half again as much to the account balance without any explanation whatsoever and then sue on the fraudulent balance, but without bothering to properly serve the defendant.

I spent years as the person with primary responsibility for tracking legislation and case law for a junk debt buyer. Every time a company lost in court over improper fees, I would be writing a single paragraph in a tracking database summarizing the case and explaining any implications. Because we were a Canadian company in a sleazy business, the regulators and courts gave us perhaps more scrutiny than others, and certainly far more than the banks. My inbox was constantly full of newsletters like this. Looking this page up for the first time in years, I notice that a lot of these products have been discontinued. I'm wondering if this is because the industry no longer has as much reason to fear regulation and the courts.

While there were a few operators who would load on tons of obviously illegal fees, these companies were typically not very heavily involved in pursuing legal remedies for debts, more just using threats of suing as a lever to extract voluntary payments from their marks. From what I could gather their presence was marginal, and the companies themselves were ephemeral and mostly run by straight-up confidence men. One particularly humorous example was a man who after being caught twice running a fraudulent operation ended up in prison. The case I read about was how his third operation got shut down. His jailers had noticed he was running a collection agency from prison. Most of the time, though, illegal fee cases were about minutia at the margins, and banks were caught doing this just as often as debt buyers or third party collectors.

No, the really shameful thing is that those usurious fees and penalties and interest that double or more all the small debts that pile up on the unfortunate are for the most part perfectly legal. The courts are also far from innocent in all this. The debt collection rocket-docket can be an important source of revenue for state courts starved of traditional revenue. $500 in filing fees for 10 minutes of a clerk's work and two minutes for a judge to sign the default judgement is a nice way of making sure they have a little in the kitty for the next time the photocopier breaks.

It goes like this. A delivery driver is finding she's getting slammed by skyrocketing gas prices circa 2007. She takes advantage of a Citi-Citgo gas card to make ends meet. The card has a $1000 limit, but activation fees eat up a third of that. She quickly maxes out the card and makes the minimum payment for a few months until she loses her job and stops making payments. The first default cranks up the interest rate to 29.99%. She gets dinged with a $50 late payment fee. For the next six months, this pattern continues. 30APR compounded monthly with $50 being added to the principal over and over. The card is finally charged-off. At which point there is an additional $100 charge-off fee added to the balance and the account is closed. At this point, the consumer receives the "charge-off statement", which is typically generated after the bank's system has zeroed the account and charged it to profit and loss. This is intentionally confusing, since our hapless unemployed driver sees a statement showing a zero balance and the account cancelled and closed. Maybe the bank has just decided to call it a loss and move on, she thinks.

Of course, as soon as she has received this letter in the mail, the bank has already gathered her loan with others into a portfolio of bad loans and is shopping it around to a bunch of debt buyers, many of whom are just middlemen intending on busting up this purchase into higher and lower tranches and then selling those down the line. Eventually, one of these companies decides to attempt collection on our victim rather than just selling it again. The account is reopened, and a year has elapsed since charge-off. The account has reopened, and now the balance is over $2000 before the debt collector even begins adding fees. The first fee to go on is $10 for pulling a credit report. This is insult to injury, as the very act of doing this will hurt her credit. Now that credit report shows a recently added address and employer, so the account is sent to a skiptracer to confirm. The skiptracer calls around pretending to be her or a family member, maybe even calling her up pretending to be offering a job. Instead of a job, she gets a dunning letter showing a balance that is over three times what she actually spent on gas with the card. Angry, frustrated, ashamed and afraid, she ignores it, not knowing what she can do. A process server hands her a summons at work a month later—unless that process server isn't also feeling the pinch of high gas prices and sub-minimum-wage piecework and instead decides to sign affidavits saying he served someone in Uniondale then five minutes later served someone else in Westchester County, then chucking those summons in a dumpster.

So the deadline to file an answer comes and goes, the debt buyer files for default judgment. At this point, the principal is now recalculated for the first time since charge-off. Added to it are two years of interest at 30%, plus $320 in court fees, $100 in collection fees and $75 for bargain-basement service which may or may not have actually been effected. The poor woman now has a judgment entered against her for $3000, against which 30% interest continues to accrue, and to which execution fees can now be added every time the servicing law firm attempts a wage garnishment or schedules an asset exam or whatever.

This is legal, and it ruins people's entire lives, sometimes forever, and it happens over and over every single day.
posted by [expletive deleted] at 8:35 PM on March 22, 2015 [25 favorites]


We needed to grab $10K+ worth of landscaping stuff, and the retailer did two-year interest-free terms on an HSBC card. So we got the card, threw it in a sock drawer, and paid it off in six months or go.

Then I started getting cranky letters that I wasn't using the card, and that if I didn't start, they'd cancel it. I couldn't care less, so I ignore them.

Except they don't seem to be able or willing to do that, perhaps because it's in credit to the tune of several cents. So they keep sending me letters and I keep laughing. One day, the cost of the letters will have outstripped the $10K they spotted me in the first place.
posted by obiwanwasabi at 8:44 PM on March 22, 2015 [2 favorites]


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