Citizens fined $20.5m for deposit mistakes

When you make a deposit at a bank window or an ATM, doublecheck your math to make sure you filled out the deposit slip correctly.

“Fifty dollars may seem like a small amount to a bank with assets worth billions of dollars, but it is real money to regular people”, said CFPB Director Richard Cordray”.

In cases where there was a discrepancy between the check amounts and the deposit slip amount, or where a bank scanner misread the slip or the checks, Citizens would not credit customers for the difference unless it rose above a certain threshold, according to the federal government.

Citizens Bank wasn’t a good citizen when it didn’t give customers full credit for all of their deposits, authorities said Wednesday.

By failing to verify deposits as customers were promised in account disclosures, the bank shorted them of millions of dollars, Cordray said. “Consumers deserve to have confidence that they can move their money around securely without exposing themselves to unwelcome risks, such as a bank resolving an error by keeping the difference for itself”. Citizens Bank, based in Rhode Island, violated the Dodd-Frank Wall Street Reform and Consumer Protection Act’s prohibition on unfair and deceptive practices by failing to properly credit consumers’ checking and savings accounts, regulators said.

The protection bureau said it discovered the practice, which was found throughout the bank’s 12-state footprint, through a whistle blower.

The bank ignored the deposit discrepancies if they fell below a certain amount, sometimes up to $50, he said. The refund portion is expected to rise after the the Office of the Comptroller of the Currency presents its final tally.

The CFPB is taking this action in coordination with the FDIC and the OCC.

Citizens Bank, which operates in the Northeast and Midwest, said that its practices for dealing with mathematical errors “could have been better”. The FDIC separately ordered the bank to pay restitution and a $3 million civil penalty.

The bank has since improved its technology, said Jim Hughes, a Citizens spokesman. The bank said it implemented a new teller system in the fourth quarter of 2013. In total, Citizens Bank must pay approximately $11 million in consumer refunds and $20.5 million in federal penalties for these coordinated actions, according to the CFPB.

“Customers who were over-credited will keep the excess funds applied to their accounts and customers who were under-credited will be reimbursed”, Hughes said in a statement. That’s why the government is slapping the company with civil sanctions and fines, said bank regulators who joined Cordray in announcing the resolution with the bank.