Business
Citi to Refund $700 Million for Deceptive Card Practices
KEN SWEET, AP Business Writer
NEW YORK (AP) — Nine million credit card customers will receive refund checks from Citigroup after U.S. regulators forced the bank to repay $700 million and fined it $70 million for illegal and deceptive practices.
The order, coming from the Consumer Financial Protection Bureau, is the latest multimillion dollar settlement against the largest credit card issuers for their role in selling “add-on” products to customers, such as credit score monitoring or “rush” processing of payments. Bank of America reached a similar, slightly larger settlement with regulators in 2014 and JPMorgan Chase was fined in 2013.
Under an agreement announced Tuesday with the CFPB, Citi will issue refunds to 8.8 million affected consumers who paid for these types of add-on products, and will pay two separate $35 million fines to the CFPB and to the federal bank regulator the Office of the Comptroller of the Currency.
The settlement comes on the five-year anniversary of the creation of the CFPB, which came into existence through the passage of the Dodd-Frank law that overhauled the financial industry following the 2008 financial crisis.
“We continue to uncover illegal credit card add-on practices that are costing unknowing consumers millions of dollars,” CFPB Director Richard Cordray said in a statement. “This is the tenth action we’ve taken against companies in this space for deceiving consumers.”
Some of the illegal activity by Citi goes back to as early as 2000, the CFPB said, and ended in 2013, and covers a range of products sold by Citi and third-party affiliates.
In one allegation, Citi telemarketers were said to have sold consumers identity theft protection services with a 30-day “free” trial, when no such free trial existed; or signed up consumers for an add-on service when it was ambiguous whether the consumer actually said they wanted it. In another situation, Citi sold credit monitoring services when Citi wasn’t performing such services at all, or were not actively monitoring a consumer’s credit file with credit reporting bureaus.
Citi also allegedly misrepresented its customers by charging a $14.95 “expedited” payment fee to customers who made over-the-phone payments and did not tell consumers about no-fee options.
Credit card add-on services were a lucrative source of revenue for banks for several years, sold to consumers as ways to protect their credit scores or identities or protect them if they lost their jobs. Banks’ marketing of such services largely ended after increased regulatory scrutiny.
“Add-on services, for the most part, provide no benefit to consumers and people should be very careful to sign up for them,” said Nick Bourke, an expert at the Pew Charitable Trusts specializing in consumer lending issues.
While credit card companies have largely ended the practice, Bourke and other consumer financial advocates say they are still sold by some high-cost installment loan providers or payday lenders.
In a statement, Citi said it stopped the practices and has been issuing statement credits since 2013 to the affected customers. For the customer who no longer has an account at Citi, a check will be mailed.
Citi has already set aside the money to pay for the settlement, a spokeswoman said.
Citigroup shares rose 25 cents to close at $59.10, despite a broad market decline.
Copyright 2015 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Activism
Oakland Post: Week of November 13 – 19, 2024
The printed Weekly Edition of the Oakland Post: Week of November 13 – 19, 2024
To enlarge your view of this issue, use the slider, magnifying glass icon or full page icon in the lower right corner of the browser window.
Activism
LIVE! — TOWN HALL ON RACISM AND ITS IMPACT — THURS. 11.14.24 5PM PST
Join us for a LIVE Virtual Town Hall on the Impact of Racism hosted by Post News Group Journalist Carla Thomas and featuring Oakland, CA NAACP President Cynthia Adams & other Special Guests.
Thursday, November 14, 2024, 5 p.m. – 6:30 p.m. PST
Join us for a LIVE Virtual Town Hall on the Impact of Racism hosted by Post News Group Journalist Carla Thomas and featuring Oakland, CA NAACP President Cynthia Adams & other Special Guests.
Thursday, November 14, 2024
5 p.m. – 6:30 p.m. PST
Discussion Topics:
• Since the pandemic, what battles have the NAACP fought nationally, and how have they impacted us locally?
• What trends are you seeing concerning Racism? Is it more covert or overt?
• What are the top 5 issues resulting from racism in our communities?
• How do racial and other types of discrimination impact local communities?
• What are the most effective ways our community can combat racism and hate?
Your questions and comments will be shared LIVE with the moderators and viewers during the broadcast.
STREAMED LIVE!
FACEBOOK: facebook.com/PostNewsGroup
YOUTUBE: youtube.com/blackpressusatv
X: twitter.com/blackpressusa
Activism
Oakland Post: Week of November 6 – 12, 2024
The printed Weekly Edition of the Oakland Post: Week of November 6 – 12, 2024
To enlarge your view of this issue, use the slider, magnifying glass icon or full page icon in the lower right corner of the browser window.
-
Alameda County3 weeks ago
Alameda County District Attorney Pamela Price Announces $7.5 Million Settlement Agreement with Walmart
-
Activism3 weeks ago
‘Jim Crow Was and Remains Real in Alameda County (and) It Is What We Are Challenging and Trying to Fix Every Day,’ Says D.A. Pamela Price
-
Bay Area3 weeks ago
In the City Attorney Race, Ryan Richardson Is Better for Oakland
-
Activism3 weeks ago
Oakland Post: Week of October 30 – November 5, 2024
-
Alameda County2 weeks ago
D.A. Price Charges Coliseum Flea Market Vendors in Organized Retail Theft Case
-
Activism3 weeks ago
‘Criminal Justice Reform Is the Signature Civil Rights Issue of Our Time,’ says D.A. Pamela Price
-
Activism3 weeks ago
“Two things can be true at once.” An Afro-Latina Voter Weighs in on Identity and Politics
-
Arts and Culture3 weeks ago
MacArthur Fellow Jericho Brown’s Poetry Reflects Contemporary Culture and Identity