Citibank will Pay $700 million for Illegal Credit Card Practices
Article by Vicki Needham | Featured on thehill.com | Image Credit: TungCheung / Shutterstock.com
Citibank will pay $700 million to 8.8 million consumers for illegal credit card practices as part of a settlement with a federal government watchdog.
The Consumer Financial Protection Bureau (CFPB) said Tuesday that Citibank and its subsidiaries engaged in deceptive marketing and bill practices across millions of consumer accounts for credit card add-ons and services such as debt protection and credit monitoring products.
“We continue to uncover illegal credit card add-on practices that are costing unknowing consumers millions of dollars,” said CFPB Director Richard Cordray.
“In our four years, this is the 10th action we’ve taken against companies in this space for deceiving consumers,” Cordray continued.
“We will remain on the lookout for similar conduct and will address it as we find it.”
Citibank must provide $479 million in consumer relief to about 4.8 million consumer accounts for deceptive marketing or retention practices.
The bank also must pay approximately $196 million to nearly 2.2 million consumers who enrolled and were charged for credit monitoring products even though Citibank didn’t provide all of the promised services.
In addition, Department Stores National Bank, a Citibank subsidiary, must provide about $23.8 million in consumer relief to about 1.8 million consumers for charging expedited payment fees on delinquent accounts.
Citibank and its subsidiaries will pay $35 million in civil money penalties to the CFPB.
From at least 2003 through 2012, Citibank actively marketed and enrolled consumers in five debt protection add-on products, which promised to cancel a consumer’s payment or balance or defer payments if the consumer experienced certain hardships, such as job loss, disability and hospitalization.
Citibank also marketed and sold other add-on products that offered credit-monitoring or credit report-retrieval services as well as a service that notified credit and debit card issuers if consumers reported a card lost or stolen.
The announcement comes on the fifth anniversary of the Dodd-Frank financial law that created the CFPB, which many Republicans want to overhaul.
Isler Northwest LLC is a firm of certified public accountants and business advisors based in Portland, Oregon. Our local, regional, and global resources, our expertise, and our emphasis on innovative solutions and continuity create value for our clients. Our service goal at Isler NW is to earn our clients’ trust in us as their primary business and financial advisors.
Isler Northwest
1300 SW 5th Avenue
Suite 2900
Portland, Oregon 97201
