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Citibank Required to Pay $735 Million for Illegal Practices
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Summary: Citibank must pay back $700 million to consumers and $35 million to the CFPB as a penalty for the numerous illegal credit card related practices the bank was engaging in.

Citibank, N.A. was found to have used deceptive marketing and unfair billing by the Consumer Financial Protection Bureau. The bank has been ordered to pay $700 million to eligible consumers that were affected by the illegal acts on their credit card add-on services and products.


It is estimated that 8.8 million consumers have been affected by their deceptive billing, marketing, and administration of debt protection and credit monitoring services. A subsidiary of Citibank was also found to have charged 1.8 million consumers for the collection calls they made. The subsidiaries and Citibank must pay $35 million to the CFPB for civil money penalties.

The CFPB has been monitoring credit card add-on practices, taking action against ten companies in four years that have been using this illegal service. Citibank was enrolling consumers from 2000 to 2012 in their five debt protection products: AccountCare, Balance Protector, Credit Protection, Credit Protector, and Payment Safeguard. The promise from these services to the consumers was that if they experienced financial hardships they could cancel or defer payments. Other services they marketed to consusmers were IdentityMonitor, DirectAlert, PrivacyGuard, Citi Credit Monitoring Services, and Watch-Guard Preferred.

Consumers that were signed up at retail locations often did not know they were signing up for the credit card and debt-protection coverage when using the pin-pad screens. Citibank and its providers also used telemarketing calls, online enrollment, retailers, or when enrolled consumers called to cancel as opportunities to deceptively push the products.

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The telemarketers would not properly inform the consumer about the cost, even telling consumers that there was a free 30-day period but they were still charged. Consumers were also told that if they paid off their balance by the due date they could avoid the fees but they actually had to pay off their balance before the end of the billing cycle.

Citibank was enrolling consumers in programs that were unable to fully benefit from because they were ineligible. They would then charge consumers when they did not have the authority from the consumer to do so. Some consumers were charged even though they were not receiving the services.

The consumers do not need to complete any actions and will automatically be reimbursed by Citibank. For consumers being charged for services they aren’t receiving, they will no longer be billed. Citibank is not allowed to market these services until they submit a compliance plan.

Citibank has not been on the good side of the law for awhile. Read these other articles to see what other legal woes Citibank has.




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