Citizens Financial Group, Inc. Reaches Deposit Reconciliation Agreements

“Many purchasers misplaced cash that rightfully belonged to them”, he stated.

Instead, the bank, which operates retail branches in approximately a dozen states, kept the difference when discrepancies arose between the amounts individual and business customers actually deposited and the totals recorded from their deposit slips, the regulators said. 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 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.

But in cases where the bank’s scanner misread either the deposit slip or the check amounts, or if the total on the deposit slip did not equal the total of the actual checks, Citizens Bank did not correct the mistake or investigate if it was below a certain amount.

The Windfall, R.I., regional financial institution credited an account with the quantity on the slip even when it was lower than the precise complete of money and checks deposited, regulators stated.

This marks the CFPB’s first action involving illegal practices in connection with deposit processing, an area in which the bureau said it would continue to be vigilant.

By failing to verify deposits as promised, the bank shorted customers out of millions of dollars. 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. Citizens also must pay $20.5 million in federal penalties. The FDIC separately ordered Citizens Bank of Pennsylvania to pay restitution and a $3 million civil penalty.

Citizens also said the bank is “working with our regulators to make appropriate redress as quickly as possible”.

The bank said the problems stemmed from the use of older teller technology for next-day crediting of deposits. “However, these past practices and disclosures, principally prior to early 2011, could have been better”.

“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.

During the period in question, the customer would then give the deposit slip to the bank and get a receipt for the transaction. It said changes made in 2013 have automated deposit reconciliation “and we believe our process is now considered among the best in the industry”.