Citibank to Pay Millions to Consumers

Do Not Fall for Deceptive Credit Card Marketing

Citibank to Pay Millions to Consumers
August 21, 2015

Love or hate them, you cannot deny that the Consumer Finance Protection Bureau (CFPB) is doing its job with gusto. The CFPB has taken on multiple large companies and financial institutions, levying heavy fines like the nearly $800 million fine against Bank of America. We can now add Citibank to the growing list.

Citigroup will pay approximately $770 million to settle allegations of misleading practices regarding add-on credit card products and various fees associated with their products. $70 million of the fine is a civil penalty to the CFPB and the Office of the Comptroller of the Currency (OCC). The remaining $700 million is slated for refunds to approximately 7 million affected customers.

The products were sold and marketed by Citibank from 2003-2012 and covered a series of debt protection and credit monitoring products, none of which are still offered by Citibank or its subsidiaries. Complaints were focused on three basic product areas:

  • Identity Theft Monitoring – Identity theft protection products were misrepresented in several ways, according to the CFPB. In one case, a marketing campaign implied that a product monitored the customer's credit reports at all three major credit reporting sites (Equifax, Experian, and Transunion), but the product only monitored information provided by a third-party vendor. Errors between the multiple parties involved meant that not all customers received their benefits as expected.

    Some customers were told the monitoring service would protect them from fraudulent charges when all it actually did was look for suspicious changes to the purchase pattern. Others were offered products with a free thirty-day trial, yet were charged for the product during the trial period, or signed up for an initial $1 monthly trial offer without being clearly told that they must cancel the service to avoid future charges.

  • Credit/Payment Protection – Citibank payment protection products offered protection against a financial calamity, such as job loss, by pushing back payment due dates or cancelling them altogether. Some consumers were signed up even though they would not be eligible for all the benefits that the service provided.

    Others signed up for credit protection without realizing that was what they were doing, based on confusing language on the PIN pad. They believed they were acknowledging receipt of information instead of signing up for a new service.

  • Payment Programs – Customers were deceived by several Citibank subsidiaries into paying for delinquent accounts over the phone for a $14.95 fee when it was not made clear that consumers could pay their bills in other ways without incurring that convenience fee. Bank employees contacted the customers asking if they wanted to use the service without describing the options.

Those subsidiaries will be paying refunds of $23.8 million to approximately 1.8 million customers affected by the expedited payment service. The remainder of the $700 million is split between roughly $479 million to reimburse consumers for deceptive marketing and/or retention practices (4.8 million consumers) and $196 million to consumers who did not get the credit monitoring services that they were promised.

Consumers who still have Citibank accounts will receive a credit for the refund amounts, while checks will be mailed to those who left Citibank. If you think that you may be affected and that Citibank may not have your most updated address, contact Citigroup to make sure that you receive your refund.

In the CFPB’s four years of existence, Citibank's fine is the tenth Bureau action regarding customer deception. It probably will not be the last. History tells us that there will be plenty more deceptive products and practices to root out. Consumers would do well to remember that if anything, especially a credit product, sounds too good to be true, then it usually is.

If you would like to monitor your credit to prevent identity theft and see your credit reports and scores, check out our credit monitoring service.


Photo ©iStock.com/luoman

  Conversation   |   29 Comments

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Britt | 08.21.15 @ 17:22
It's good that they are trying to do everything they can for their customers and to attempt to protect them from identity theft at all costs.
Beverly | 08.21.15 @ 17:22
I don't trust Credit Card companies as far as I can throw them and since we pay off our credit card every month they don't particularly like us either as we don't make them any money with extra fees! Someone is always there to take advantage of the less-informed.
Kamie | 08.21.15 @ 17:23
This is some interesting news, I am definitely going to have to share with my Papa about this, He left CitiBank because he was not getting all the "perks" he was supposed to.
Angie | 08.21.15 @ 17:26
This makes me wonder about all of the big credit card companies, then. I thought CitiBank was one of the reputable ones (as far as credit card companies, go). Should we trust any of them?
Bobbie | 08.21.15 @ 17:27
I have always said no to any "perks" that were offered with any of my cards. Glad they were caught in these acts.
Elaine | 08.21.15 @ 17:28
I am glad that I learned years ago not to get credit cards. Don't trust them and don't want one. Had a small one when I first got married it was so much hassle.
Daniel Dohlstrom | 08.21.15 @ 17:30
It jsut seems another story of money seeking money. Good to see people will be taken care of and the company held accountable
Nancy | 08.21.15 @ 17:37
I'm glad for the fines but I have no doubt that their customers pay for the cost of the fines in the long run. The are all unscrupulous, money grubbing companies, in my opinion.
Victor | 08.21.15 @ 17:48
Is good that one bank is taking the step ahead and actually doing something for their customers
Sarah | 08.21.15 @ 17:53
I will honestly never understand how it's okay to cheat someone, or in this case, "mislead" them. It's good they've gotten a slap for it but we all know they'll recoup their money one way or another. They're there to make the money, not hand it out.
Apryl | 08.21.15 @ 18:06
Good! Corporations need to quit stomping on the little guys.
Chelsey | 08.21.15 @ 18:08
I really dislike credit card companies. People need to be more educated about money and realize how to actually utilize credit. My husband and I are paying for our poor credit mistakes now. I'm glad that they are being held accountable.
Donnie | 08.21.15 @ 18:19
And I just got a citi credit card
gracie | 08.21.15 @ 18:23
It's good that the companies are finally being held accountable. Economy is suffering in part due to the actions of many of these companies. Although it is at least something that they are being held accountable it doesn't really help the people who's credit or finances suffered damage that will not be repaired by this. Hopefully it will protect others in the future though.
trish | 08.21.15 @ 18:25
Citibank was one of the cards we used that we were so happy to pay off and close. So many fees, most hidden, and promises not kept. Here is hoping we are one of those that receives a check.
Erin | 08.21.15 @ 18:27
I'm not surprised they were looking for another way to make a buck. It's good to hear that they have been caught and that the consumers are going to get some restitution after being swindled.
Casey | 08.21.15 @ 19:06
I'm glad they doing their best to protect the interest and funds of the people who have accounts with them. Not many companies would do that.
Christina | 08.21.15 @ 19:18
Good! It's about time these companies are held accountable for misleading their trusting customers!
Irene | 08.21.15 @ 19:30
They tried to sell me that identity theft monitoring! They said that way I would be protected against fraudulent charges. I told them sorry but if someone makes fraudulent charges I have no intention of paying them anyway.
Christina | 08.21.15 @ 19:39
It's good they are trying to fix the mistake..
Steffanie | 08.21.15 @ 20:34
Glad we don't use any perks on our credit cards. We only use ours in emergency situations.
Vaughn | 08.21.15 @ 20:45
This doesn't affect me personally but it's interesting news.
Zanna | 08.21.15 @ 20:56
Buyer beware. Does the CFPB post a list of reputable agencies? Sure would be nice to be able to trust a company, instead of hoping for the best.
Carla Truett | 08.21.15 @ 21:33
Kudos to the CFPB for standing up to the big companies! Its about time someone looked into all those extra charges.
Leah Gardner | 08.21.15 @ 21:53
Moving to the local credt union was one of my best decisions. Big banks just charge so much in random fees
Andrea | 08.21.15 @ 21:59
I used to work for a credit card company. I will never own a credit card again.
Heather | 08.21.15 @ 23:55
This is a good start, but I think they need to take a look at all lending companies. I'm not saying they all prey on unsuspecting consumers, but some do.
Sara | 08.22.15 @ 01:31
I still wont say I do trust any of these companies. With that being said always read fine print and any extra information you get.
Ron | 08.22.15 @ 18:48
These fines are meaningless. Until bankers who defraud and crash the markets willfully are charged and brought to trial, this will continue. No fine will. Bother them. This is not even a percentage point. Real penalties that stick and can't be bought off. Now.
$commenter.renderDisplayableName() | 12.10.16 @ 10:43
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