Citigroup has been hit with a $70m (£45m) fine and ordered to pay $700m in remediation to customers after a review into how it sold credit card products.
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The enforcement action announced Tuesday morning is tied to the lender’s marketing and billing tactics ranging from 2000 to 2013 of credit card add-on products, including credit-monitoring and debt-protection services.
“We continue to uncover illegal credit card add-on practices that are costing unknowing consumers millions of dollars”, said CFPB Director Richard Cordray in a statement. “We will remain on the lookout for similar conduct and will address it as we find it”.
“Citi fully cooperated with the OCC and CFPB and has taken extensive steps to address the issues that affected customers, including discontinuing sales, issuing refunds to affected customers and strengthening our processes, policies, systems and controls”, Tarter said.
These practices went on from January 2009 to October 2012. These products included services that would cancel or delay payments, credit monitoring, and services that would notify customers of lost or stolen credit cards.
The services, “IdentityMonitor”, was marketed as being generated by the three major credit reporting bureau, but the CFPB said, “another third-party vendor generated the score using as an input the consumer’s credit files separately maintained at those credit reporting companies”. It also enrolled some consumers without any billing authorization or by construing ambiguous responses during calls for a billing authorization as permission for enrollment, and then charged consumers for the products.
Additionally, Citi will pay a total of $70 million in cumulative penalties to the CFPB and the Office of Comptroller of the Currency and agree to be barred from marketing add-on products to customers until the bank submits a compliance plan to the consumer agency. Citibank also misled consumers in telemarketing calls and in online marketing about the credit score benefit. “Affected customers will automatically receive a statement credit or check, and those no longer with Citi who are eligible will be mailed a check”.
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Citibank must provide approximately $479 million in consumer relief to about 4.8 million consumer accounts as a result of the deceptive marketing or retention practices. About 2.2 million consumer accounts were improperly billed product fees while not receiving the full product services.
