CREDIT CARD DEBT SUITS BASED ON
ACCOUNTS OF HSBC BANK NEVADA, N.A.
HSBC BANK NEVADA, N.A. was a national bank that has since ceased to exist. It issued various private label and co-branded cards, including Best Buy and Metris. Its portfolio also included accounts issued in the name of DIRECT MERCHANTS BANK.
Claims based on charged-off accounts of this nature are typically brought by debt buyers, such as NCEP, LLC; PORTFOLIO RECOVERY ASSOCIATES, LLC ("PRA"); CAVALRY SPV I, LLL (as assignee of EQUABLE ASCENT FINANCIAL, LLC); MIDLAND FUNDING, LLC; and MAIN STREET ACQUISITION CORP.
Attorneys for these debt buyers often do not produce a cardmember agreement to establish the contractual foundation of their claim. Other documentation is often also of poor quality. Sometimes they submit an application for a credit card, and pretend that the application is the contract, even if the application makes it clear that it may or may not be granted, and states that the cardholder agreement will be sent with the card (assuming the application is approved). In many of these debt collection cases, the documentation of the portfolio transfers is often of very dubious character also. There is frequently no specific evidence to demonstrate that the particular account on which the debt collection attorney sues was part of the portfolio to which the bill of sale or other form of assignment document pertains. One-page bills of sale typically refer to other documents (such as exhibits, schedules, and contracts) and the information contained in such other documents, but these other documents are typically not attached, and therefore are not before the court for evidentiary purposes.
HSBC BANK NEVADA, N.A.'s active credit card portfolio was acquired by Capital One Bank, National Association, McLean, Virginia and Capital One Bank (USA), National Association, Glen Allen, Virginia in a 2011 asset purchase transaction, with regulatory approval granted in 2012. Defaulted account were apparently also part of the transaction, which arguably makes Capital One a debt collector, as opposed to a creditor, under the FDCPA, when it attempts to collect on such accounts. But there may be reasonable grounds for legitimate disagreement on the matter, particularly in cases when it is not clear, or not clear initially without the benefit of discovery, what that status of the the particular account was at the time of the portfolio sale transaction.
HSBC BANK NEVADA, N.A subsequently merged with its corporate parent and its charter under the National Bank Act was surrendered to the OCC. As a result, the bank no longer exists.
EXCERPT FROM APPLICATION FOR REGULATORY APPROVAL
FOR HSBC-CAPITAL ONE DEAL FOR SALE OF CREDIT CARD BUSINESS
|HSBC - CAPITAL ONE DEAL - TRANSACTION SUMMARY|
(click image to enlarge)
HSBC Nevada was chartered in 1993 under the Competitive Equality Banking Act (“CEBA”).
A CEBA bank is not a “bank” for purposes of the Bank Holding Company Act if it engages “only in credit card operations” and is restricted by statutory provisions from competing with retail banks by limiting its deposit taking and lending activities. Under CEBA, HSBC Nevada could not make any loans outside of its credit card operations, including commercial loans, farm loans, or community development loans. In addition, HSBC Nevada applied for, and received, a limited purpose designation under the CRA on February 1, 1996. A limited purpose bank is a bank that offers only a narrow product line to a regional or broader market and for which a designation of limited purpose bank is in effect.
HSBC Bank Nevada, National Association, Las Vegas, Nevada ceased to exist when it merged into HSBC Finance Corporation, Mettawa, Illinois (“HBIO”), its non-bank parent corporation incorporated under Delaware Law, pursuant to 12 U.S.C. § 215a-3. 1 As a result of the merger, HSBC Nevada’s corporate existence ended and its charter was surrendered to the OCC.
FDIC information on HSBC-related financial institutions in the U.S.
The Bank Holding Company is HSBC HOLDINGS PLC (based in London)