The Federal Government Orders Citibank to Pay $700 Million to Customers -

The Federal Government Orders Citibank to Pay $700 Million to Customers

Bitcoinist_Court of Cassation

When the instances of overcharging and the use of “deceptive marketing” techniques to exploit customers are increasing in numbers, the decision by the federal government to order Citibank to pay $700 million to customers is exemplary.

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The official website of the CFPB says that 8.8 million customers will be compensated in the payout, which includes 7 million people overcharged directly by Citibank and another 1.8 million customers of the bank’s subsidiaries. The action was taken by the CFPB in coordination with the Office of the Comptroller of the Currency, which is separately ordering a $35 million civil penalty and restitution from Citibank and Department Stores National Bank for some of the same illegal practices.

The CFPB Director Richard Cordray was quoted saying:

“We continue to uncover illegal credit card add-on practices that are costing unknowing consumers millions of dollars. 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.”

According to the judgment reached on by the CFPB between 2003 and 2012, Citibank which is owned by Citigroup (C) enrolled these customers in credit monitoring services or programs deceptively and promised to defer payments or forgive debt in the event of job loss or another financial hardship. The bureau also found that the all the while bank signed people on to the programs deceptively as it misrepresented fees and overstated the benefits.

Citibank penalty Unfair, Deceptive, or Abusive Practices

Unfair, Deceptive, or Abusive Practices

The CFPB followed the Dodd-Frank Wall Street Reform and Consumer Protection Act, to deliver justice to the customers who were deceived and abused by the Citibank. The authority found that Citibank was engaged in unfair, deceptive, or abusive practices, or other violations of federal consumer financial law. The following have been held by the CFPB:

  • Provide $700 million in relief to roughly 8.8 million consumer accounts.
  • Provide approximately $479 million in consumer relief to about 4.8 million consumers for deception using dubious marketing or retention practices.
  • Pay approximately $196 million to roughly 2.2 million consumer accounts that enrolled in the credit monitoring products and were charged while Citibank did not perform all of the promised services.
  • Department Stores National Bank must provide about $23.8 million in consumer relief to almost 1.8 million consumer accounts for charging expedited payment fees on these delinquent accounts.
  • Pay a $35 million penalty to the CFPB’s Civil Penalty Fund.

Affected Consumers Do Not Have To Take Any Action to Get Their Refund

The CFPB held that the Citibank will have to conveniently repay consumers affected by the dubious marketing and deceptive practices; thus, the affected consumers do not have to take any action to get their refund. Whereas for the unfair billing practices related to the credit-monitoring products, Citibank has completed reimbursement to eligible consumers, for eligible consumers who have not received refunds yet, the bank will initiate and complete a remediation process so that reimbursement is done effectively and conveniently.

Prohibitions and Limitations put on the Citibank

Not just penalties but a number of restrictions and limitations have been put on the Citibank by the CFPB; one of them is that the bank will have to end unfair billing practices. The authority held that now consumers will no longer be billed for the credit monitoring products if they are not receiving the promised benefits. Similarly, the bank will have to cease engaging in illegal practices i.e. it cannot market all add-on products by telephone or at the point of sale. This in effect is an end to deceptive marketing tactics from the Citibank. If the Citibank wants to retain consumers in its products by telephone it will have to submit a compliance plan to the CFPB.

Citibank Claims to have Paid Some Customers

In a statement issued earlier this week, the Citibank said it has paid some customers back. The affected customers according to the bank will automatically receive a statement credit or check and those no longer with Citi who are eligible will be mailed a check. The bank also claimed that it “fully cooperated” with the CFPB investigation and the first repayments went out in 2013. Following the judgment, the bank set aside money for remaining paybacks and according to it the programs associated with the overcharging have all been closed down.

What do you think about Citibank? Comment below!

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Deepak Tiwari

Deepak Tiwari, though a lawyer, working as a journalist for six+ years now. An avid Bitcoin supporter, he currently writes on Bitcoin and other crypto-currencies for, a portal that offers exclusive news and reviews for readers, traders and brokers. His other specialties/interests include writing on law & governance, finance, internet marketing, careers, politics, international relations & diplomacy, etc. Follow Deepak Tiwari in Twitter

  • Jarvis

    The BANKSTERS continue to commit fraud upon hardworking people and fraud upon the courts. The biggest Ponzi scheme the world has ever seen , where the Banksters created credit out of thin air, not for their borrowers, but for the banksters themselves via the Federal Reserve’s magic check book, with no bank account behind it. The Bankster then loaned that imaginary money to people on the security of overvalued real property with the deliberate aim of reducing the artificially raised property prices and putting people out of work.People without income cannot pay their bills, so they were guaranteed they could steal all that real property from their rightful owners. Of course you would say to yourself, that makes no sense because the Banksters would lose money when foreclosing on the security , but you’d be wrong because the banksters insured the debt with an insurance company, but just forgot to tell the borrowers that. SO they knew they could not lose. Its what you might call having your cake and eating it too. You see, just secretly insuring the debt was the way they ensured that they lost no money. First they sold investors in Wall Street on the idea of using pensions and other fund moneys to invest in the profitable housing market. Then they sold homeowners on the idea of borrowing money against their rising property values, secure in knowing that they had artificially raised those prices and knew they could reverse that trend rapidly, when the time was right. Then they found another group of investors and sold them on insuring against the unlikely risk of those secure mortgages defaulting. But, as you know, they had already insured the downside risk. So they devised a new name that no one understood called the credit default swap. These were not insurance policies regulated by the states, but were unregulated securities sold on wall street to investors. So, once they got the business of insurance outside of the regulatory realm, it was no holds barred and they sold the same investment to up to 20 different groups in respect of every mortgage pool they pretended to create in the securitized mortgage scam.But people need to lose the mindset of someone who has been brainwashed by the garbage put out by government at state and federal level and echoed in the corporate owned media

    SO therefore, The banksters along side Freddie and Fannie, were and still are continuing to submit fraudulent documents to the courts in order to steal homes from homeowners. They and their substitute trustee lawyers (ie Samuel I White PC, just one of many ) are submitting FRAUDULENT papers to the courts in order to FRAUDULENTLY foreclose on homeowners across the nation. Mortgage notes with Forged Owners signatures and ta-da endorsements are being submitted to the courts in order to steal homes. Bank of america(or as they like to refer to themselves…fka countrywide) made a deal with the attorney generals to modify loans that they really had no right to modify as they were illegally acquired to begin with. They committed notary fraud, forgery, added fake endorsements and as their crimes began to come to light…………they made a deal and instead of modifications (which they LED the homeowners to believe what was happening)….they handed the fraudulent documents over to Green Tree, soon to be called DiTech..corporate criminals are notorious for changing their names after lights shine on their crimes…, among others, to foreclose. Meanwhile, homeowners are the ones who are paying the price by having their homes taken because of felonies that are being committed . Fraud upon the courts, racketeering, forgery, wire fraud, notary fraud…pathetic, nauseating, and just all around COMPLETELY disgusting. Wake up America. Wake Up.