Citi to refund $700 million for deceptive card practices

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.

Some 8.8 million consumers were allegedly impacted by deceptive marketing and billing for credit card services and add-on products like debt protection and credit monitoring, the Consumer Financial Protection Bureau said in a statement.

The CFPB, set up under the 2010 Dodd-Frank Act aimed at reforming Wall Street practices, said a Citibank unit also “deceptively” charged almost 1.8 million consumer accounts often unnecessary same-day payment fees while collecting payments. “In our four years, this is the tenth action we’ve taken against companies in this space for deceiving consumers”.

Citibank, N.A.is a national bank and insured depository institution.

Citi is the latest megabank to pay out hundreds of millions in consumer relief and penalties for its marketing of so-called “add-on” services to its credit card customers. (USA), marketed or offered credit card add-on products to consumers nationwide.

The bank misrepresented fees and terms from at least 2003 through 2012 with five debt protection add-on products, and in some cases did not provide the advertised services, federal officials said. Earlier this month, the agency took action against JPMorgan for selling bad credit card debt. (USA), used illegal practices to enroll consumers in these products. This practice continued, in some form or another, from 2000 to 2013 for some of Citi’s add-one products. Although Citibank told its telemarketers to offer “free” 30-day trials, the bank still charged customers for coverage during that period. In other instances, the CFPB says the telemarketers failed to inform users that they would be billed unless they proactively cancelled the service. Instead, the monitoring only provided alerts to changes in customer credit files maintained by major credit-reporting firms. Citibank also misled consumers in telemarketing calls and in online marketing about the credit score benefit.

However, it added that some of those practices had been administered by third parties.

“Citi will continue to notify and refund affected customers”, the bank said. (USA), used illegal practices to enroll consumers in these products.

Using leading or vague questions to sign customers up for credit card add-ons without specific authorization.

The CFPB also detailed billing practices that ran afoul of its rules, including billing customers for credit monitoring without proper authorization to do so.