Citibank to Refund $700 Million Over Illegal Credit Card Practices
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Today, the Consumer Financial Protection Bureau has ordered Citibank to refund $700 million to 8.8 million customers for illegal credit card practices.
The CFPB said Citibank engaged in deceptive marketing and unfair billing of credit card add-on products from 2003 to 2012. The Bureau said Citibank charged customers for services that they did not receive as well as misrepresenting the cost of certain services.
There were approximately 4.8 million consumers who were affected by the deceptive marketing or retention practices of the bank. Certain customers were charged a fee during a “free” trial period; in other cases, customers were not told they would be billed after the 30-day trial period if they did not cancel the product. Citibank must provide nearly $479 million in relief to these customers.
In addition, close to 2.2 million consumers purchased credit monitoring products but did not receive all the promised benefits and services; they will receive nearly $196 million in refunds. Finally, a Citibank subsidiary, Department Stores National Bank, must refund approximately $23.8 million to nearly 1.8 million consumer accounts for charging expedited payment fees on certain delinquent accounts.
Current Citibank customers will receive a refund on their accounts while former customers will receive a reimbursement in the mail.
In addition, Citibank must pay $35 million fine to the CFPB Civil Penalty Fund and another $35 million in civil penalties to the Office of the Comptroller of the Currency.
“We continue to uncover illegal credit card add-on practices that are costing unknowing consumers millions of dollars,” said Richard Cordray, CFPB Director, in a statement.
On July 8, the CFPB ordered JP Morgan Chase to pay back $50 million to consumers and another $166 million to settle probes by both federal and state authorities for selling bad credit card debt and illegally robo-signing documents.