Citibank pay an estimated $700m in relief to customers harmed by illegal credit card procedures
The Consumer Financial Protection Bureau (CFPB) has demanded that Citibank pay an estimated $700m in relief to customers harmed by illegal credit card procedures.
The fine relates to the banks ‘‘deceptive marketing, billing, and administration of debt protection and credit monitoring add-on products.’’ CFPB estimate that nearly 9m customers have been affected by the illegal practices.
Between 2003 and 2012, the national bank actively enrolled customers in a number of credit card and debt protection add-on services, including “AccountCare,” “Balance Protector,” “Credit Protection,” “Credit Protector,” and “Payment Safeguard.” It is believed that all these services were marketed deceptively by Citibank.
Some of the largest illegal marketing practices undertaken by Citibank included:
- Misrepresenting cost and fees for coverage
- Misrepresenting benefits of some products
- Illegal practices in the enrollment process
- Misrepresenting or omitting information about eligibility for coverage
Citibank also committed a number of unfair billing practices for its add-on services, including charging customers for benefits that they did not receive and failing to provide product benefits.
The lending firm is now banned from marketing all add-on products by telephone or at the point of sale or engaging in attempts to retain consumers by telephone. Citibank will also pay $35m in civil money penalties to CFPB.
‘‘We continue to uncover illegal credit card add-on practices that are costing unknowing consumers millions of dollars,’’ explained CFPB Director Richard Cordray.
‘‘In our four years, this is the tenth action we’ve taken against companies in this space for deceiving consumers. We will remain on the lookout for similar conduct and will address it as we find it.’’