CFPB Fines CitiBank $700M for Illegal Credit Card Practices

The world’s largest credit card lender has been ordered by a U.S. government watchdog agency to repay $700 million to its customers, plus $70 million in fines, due to illegal practices.
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Specifically, the bank marketed numerous add-on products for its credit cards in which it promised to offer credit monitoring, defer payments or forgive debts under certain circumstances such as job loss or financial hardship. The services were offered under such names as “Credit Protector,” “Payment Safeguard” and “AccountCare.”

Benefit of these programs were greatly overstated. Beyond that, the bank allegedly misrepresented fees, in some cases indicating the services were free or free for a period of time, when in fact, they were not.

In the case of “credit monitoring services,” there was no one monitoring changes made at the everyday transaction level, even though that’s what people believed they were paying for. Sales and marketing firms employed “leading questions” and also took ambiguous answers from consumers to mean confirmation they wanted the services.

The company also charged various “processing fees” that weren’t necessary.

Citibank did at some point red flag the problem and started paying some customers back starting in 2013. This was after 10 years of engaging in these practices.

In all, it’s believed some 8.8 million customers could be eligible for relief as a result of this decision. That involves 7 million individuals who were directly overcharged by Citi and another 1.8 million who were customers of subsidiaries of the bank.

The Consumer Financial Protection Bureau stepped in and has ordered the bank to pay back consumers for unfair billing, deceptive marketing and “other unlawful practices.”

Our Miami consumer lawyers know this marks the tenth time the CFPB has issued fined a large financial services provider for cheating consumers. Other targets of such action have included Bank of America, JPMorgan Chase, Capital One Financial and American Express. The agency also fined PayPal $25 million earlier this year for deceiving customers into using credit services offered by the company.

For its part, Citi has stated it fully cooperated with the government and has shut down all programs that involved the misleading or deceptive practices.

This is one of the highest consumer awards the CFPB has garnered since it was founded four years ago. So far, Bank of America is the company slapped with the biggest fine – $783 million paid in 2014 to put an end to an investigation into similar deceptive practice pertaining to its credit offerings.

The CFPB’s director, Richard Cordray, says the agency is continuing to uncover cases of illegal credit card practices that cost consumers millions of dollars. Cordray said the agency will continue to target the offenders and work toward recovering refunds to cheated consumers.

Meanwhile, some U.S. presidential candidates and numerous conservative Congress people have signed on to pass a measure that would abolish the CFPB, saying it’s ineffective and doesn’t protect consumers.

Undoubtedly, it’s a small agency with a relatively small budget in charge of tackling one of the most powerful industries in the world. It doesn’t get as much done as even those who work for it would like. For this reason, one of its founders, Sen. Elizabeth Warren (D-Mass.) is arguing to have the Dodd-Frank Act (which paved the way for the CFPB) to be expanded and the agency more heavily funded.

If you’re battling debt collection in Miami or the surrounding areas contact Jacobs|Keeley for a confidential appointment to discuss your rights. Call (305) 358-7991. Also, don’t miss Miami Foreclosure Attorney Bruce Jacobs on 880AM/the Biz, every Tuesday at 6 p.m. on “Debt Warriors with Bruce Jacobs and Court Keeley,” discussing foreclosure topics that matter to YOU.

Additional Resources:
Citibank Forced To Pay $700 Million To Customers, July 21, 2015, By Ben Walsh, The Huffington Post
More Blog Entries:
Report: When Banks Face Felonies, Few Fear Real Consequences, May 28, 2015, Miami Consumer Rights Attorney