HSBC Bulgarian ATM Fiasco Response III

Dear Mr. W.:

Thank you for contacting HSBC Bank USA, N.A., the world's local bank.

We appreciate your position regarding the information you had previously received, and apologize for both the inconvenience and confusion that this situation has caused you.

Financial institutions around the world, including HSBC, have recently experienced an increase in technologically advanced fraudulent activity. Included in this activity has been PIN based cash and non-cash transactions. This fraudulent activity, while affecting a wide range of consumers and financial institutions, has occurred in relatively narrow regions and locations around the world. As such, as a first line of defense, we have chosen to restrict PIN based transactions in the
specific cities and/or countries where the fraudulent activity has occurred.

Due to the evolving and mobile nature of this threat, the specific cities and/or countries that have been restricted may change at any time, as new locations become reported and previous locations are declared safe. This list is confidential and may not be publicly published.

At the time of your original inquiry on May 25, 2008, regarding your ability to access your account while travelling in Bulgaria, it is possible that this nation had not yet been identified as being part of this threat and subsequently restricted. On June 4, 2008, when we had
informed you that PIN based transactions were restricted for the entire country of Bulgaria, it is possible we had not yet narrowed the restriction to specific cities. As of June 18, 2008, a significant portion of Bulgaria has been identified and restricted for PIN based transactions, due to high levels of fraudulent activity.

Please note, these restrictions will not prevent you from performing 'credit' type signature based transactions anywhere that MasterCard is accepted.

Our Customer Relationship Center is always available, 24 hours a day, 7 days a week to meet all of your banking needs. Please e-mail us by clicking 'BankMail' in the gray navigation bar on the left or call 1-800-975-HSBC (1-800-975-4722), and speak with one of our professionals. If you are outside the United States, you may call us collect at (716) 841-7212.

Sincerely,

Heather D.
Internet Banking Unit Manager