That resulted in instances where customers’ accounts were credited for more money than they had deposited, and instances where their accounts were credited for less than they had deposited.
Advertisement
The CFPB said its investigation found that Citizens often failed to give consumers full credit when the amount scanned or manually written on the deposit slip was less than the amount of the checks and cash that customers actually deposited. Altogether, customers with hundreds of thousands of checking accounts were shorted millions of dollars over six years starting in 2008, the regulators said Wednesday.
The Consumer Financial Protection Bureau, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency said the bank did not verify all deposits as required.
Customers who are owed refunds will be contacted, regulators said. The customer then turned the slip and money over to the bank, and in turn received a receipt detailing the transaction.
In doing so, the financial institution engaged in “shoddy practices that disadvantaged shoppers of cash that was rightfully theirs”, stated Richard Cordray, director of the Shopper Monetary Safety Bureau. The consent order from the CFPB requires the bank to provide approximately $11 million in refunds to consumers and pay a $7.5 million penalty for the violations.
The bank ignored the deposit discrepancies if they fell below a certain amount, sometimes up to $50, he said. From the bank’s point of view, one could argue that the practice “was a wash”, in that the errors did not directly profit the bank or harm its customers as a collective group, Cordray acknowledged.
“As we continue to improve our overall performance as a company, we are pleased to have resolved this matter from an earlier era”, said Jim Hughes, senior vice president and head of media relations for Citizens Financial Group, in a statement provided to ACA global. The OCC separately ordered Citizens Bank, N.A., to pay restitution and a $10 million civil penalty.
Citizens Bank, which operates in the Northeast and Midwest, said that its practices for dealing with mathematical errors “could have been better”.
Citizens is neither admitting or denying wrongdoing and said it is working with regulators to compensate customers quickly. The OCC said the amount it is ordering the bank to pay customers hasn’t yet been determined.
A new system for tellers was implemented in the fourth quarter of 2013 that “is now considered among the best in the industry”, the bank said.
Advertisement
Citizens will pay $11 million in consumer refunds, $3 million in refunds to businesses, plus some $20.5 million in civil penalties for a total cost of about $35 million.
