HSBC Bank Nevada, National Association, Las Vegas, Nevada (“HSBC Nevada”) - No longer in existence

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 BANK NEVADA, NATIONAL ASSOCIATION - BACKGROUND 

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)

Target Credit Card Accounts in Texas Court (now owned by TD Bank)

  
TARGET CREDIT CARD DEBT SUITS
   
UPDATE: Target National Bank does not exist any more. It was closed and liquidated  March 13, 2013. Its portfolio of credit card accounts was acquired by TD BANK.

WHO ISSUED THE TARGET CHARGE CARD? 

This may sound like a silly question, but the fine print on the customer agreement will likely prove otherwise.

Credit card debt suits involving Target cards come in several varieties, with different entities as plaintiffs. Even when Target sues as original creditor, it is not Target Corporation that's doing it. The credit operations are run through an affiliated bank. While lawsuits have typically been brought by Target National Bank ("Target NB"), sometimes a closer look at the documentation will reveal that the cardmember agreement offered as a summary judgment exhibit (or at trial) identifies the card issuer as Retailers National Bank even though the title of the document makes reference to Target. The attorney for Target NA often does not come forth with proof that the two are one and the same, or that the entity named as the Plaintiff is the successor in interest of Retailers National Bank. Arguably, this constitutes a gap in the chain of ownership or raises a fact issue as to the identity of the original creditor. In addition to litigation brought by Target National Bank itself, debt suits on Target cards are also filed by TD Bank USA, N.A. as successor. The latter's home state is Delaware.

LAW FIRMS SUING ON TARGET CREDIT CARDS IN TEXAS  

Many debt collection suits on Target credit card accounts are brought by a law firm with the unwieldy name RAUSCH, STURM, ISRAEL, ENERSON & HORNIK, LLC ("RSIEH"). The name was even too long to be deemed suitable for a domain name. The debt collection firm's web address thus uses the acronym: www.rsieh.com.

RSIEH has as many as nine Texas-licensed attorneys listed below the signature line on its filings. It represents both Target National Bank and TB Bank USA, N.A. (and other creditors, such as CITIBANK, N.A.). When it sues for TB Bank, its summary judgment evidence typically includes a copy of the ASSIGNMENT AND ASSUMPTION AGREEMENT that governs the transfer of accounts. That agreement lists three Target entities as involved parties: TARGET CORPORATION as the Parent and Depositor, TARGET RECEIVABLES, LLC as a Seller, and TARGET NATIONAL BANK, as a Seller and Depositee.

RSIEH typically does not seek attorney's fees in addition to the amount of the debt and costs of suit (filing fees and cost of service of process).

TARGET CREDIT CARD AGREEMENTS AND TERMS 

Target credit card agreements are typically much shorter than other such form contracts (often only 2 pages with 3 columns each). They also differ from those of most other major card issuers in that they do not contain arbitration clauses, meaning that arbitrability is not an issue and cannot be invoked as a defense to litigation. The form agreements do, however, contain a choice of law clause stating that the agreement is governed by federal and South Dakota law.

A number of credit card issuers chose South Dakota as the relevant jurisdiction for regulatory reasons. Interest rates are not capped by usury laws in that state as long as whatever rate is charged is contractually authorized. Citibank is another major credit card issuer that located its credit card arm CITIBANK (SOUTH DAKOTA), N.A., there.

Copies of Target card agreements offered as summary judgments contain contract verbiage in fine print and are not always legible.

Target cards typically have variable interest rates for two types of balances: Purchases and Cash Advances. The APRs are shown as variable with the letter V in parenthesis. The late fee is $35.00 and a warning about this fee as a consequence of not making timely payments appears on monthly billing statements.

TARGET CREDIT CARD STATEMENTS 

In litigated cases, the account documentation submitted by Target (or on its behalf) typically reveals a key difference. Target routinely accelerates the maturity of the revolving balance on the last statement sent to the card holder. As a result, the amount shown as the minimum required payment on the last account statement ("Minimum Payment Due") matches the amount of the outstanding debt, i.e. the revolving balance. Therefore motions for summary judgment by Target containing such a final statement cannot be fought on the ground that the account documentation does not show that the amount sued for was actually due for payment in full. At best, it could be argued that contractual authorization to exercise the acceleration remedy has not been shown (if either the card agreement itself is not in the record or if there is insufficient proof of the Defendant's liability under the version attached as a summary judgment exhibit).

Unlike some other creditor (e.g. Discover Bank, Citibank) Target does not use a servicer entity to process payments. The billing statements issued for customers in Texas include payment coupons with an address for TARGET NATIONAL BANK either in Minneapolis, Minnesota or in Dallas, TX. The billing statements identify Target National Bank as an affiliate of Target Stores and requires checks to be made payable to Target National Bank.

Related topics: Cases involving Target accounts in Texas Court of Appeals