CFPB Hits Citibank With $700M Fine Over Credit Card Practices

The Consumer Financial Protection Bureau (CFPB) is forcing Citibank to pay up big time to consumers harmed by illegal practices related to credit card add-on products and services, the agency announced yesterday (July 21).

Citibank and its subsidiaries are ordered to pay an estimated $700 million to eligible consumers whose accounts were affected by the bank’s “deceptive” marketing, billing, and administration of debt protection and credit monitoring add-on products, a release detailing the matter stated.

Roughly 7 million consumer accounts were impacted.

The CFPB also stated a Citibank subsidiary unlawfully charged expedited payment fees to approximately 1.8 million consumer accounts through collection calls.

Citibank and its subsidiaries will also be required to pay $35 million in civil money penalties to the CFPB, and another $35 million 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,” CFPB Director Richard Cordray said in the agency’s statement. “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.”

The deceptive marketing practices Citibank is accused of involved misleading customers about specific products by misrepresenting the cost and fees of coverage, as well as the benefits associated with some products, and partaking in illegal practices during the enrollment process.

These actions reportedly took place during online enrollment, point-of-sale application and enrollment at retailers, telemarketing calls and even when consumers called to request the cancellation of certain products.

Citibank is also said to have performed credit-monitoring and credit-report-retrieval services and billed consumers without the necessary authorization, which CFPB explains is a requirement under federal law.

“Citibank engaged in these unfair billing practices from at least 2000 through 2013. About 2.2 million consumer accounts were improperly billed product fees while not receiving the full product services,” the CFPB confirmed.

The CFPB is authorized to enforce action against Citibank for all unfair, deceptive, or abusive practices as well as any other violations of federal consumer financial law, in accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Earlier this month, the CFPB took action against Affinion Group Holdings, Affinion’s affiliated companies, and Intersections Inc. for the companies’ unfair billing practices related to credit card add-on products and services. That order from the CFPB resulted in Affinion paying $6.8 million to eligible customers, along with $1.9 million in civil penalties. Intersections was ordered to pay approximately $55,000 to eligible customers, along with $1.2 million in civil penalties.

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