"Citi to refund $700 million for deceptive card practices; Settlement targets add-ons" by Ken Sweet Associated Press July 22, 2015
NEW YORK — Citigroup will refund $700 million to consumers and pay $70 million in fines for illegal and deceptive credit card practices, the bank and federal regulators said.
Tuesday’s order, from the Consumer Financial Protection Bureau, is part of the latest multimillion dollar settlement with the largest credit card issuers for their role in selling ‘‘add-on’’ products to customers, such as credit score monitoring and ‘‘rush’’ processing of payments. Bank of America reached a similar, slightly larger settlement with regulators in 2014, and JPMorgan Chase was fined in 2013.
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The settlement comes on the five-year anniversary of the creation of the consumer bureau, which came into existence through the passage of the Dodd-Frank law, which overhauled the financial industry following the 2008 financial crisis.
‘‘We continue to uncover illegal credit card add-on practices that are costing unknowing consumers millions of dollars,’’ the bureau’s director, Richard Cordray, said in a statement. ‘‘This is the tenth action we’ve taken against companies in this space for deceiving consumers.’’
Some of the illegal activity by Citi goes back to as early as 2000, the regulator said, and ended in 2013, covering a range of products sold by Citi and third-party affiliates.
Who nows how many millions they made; I'm sure it's more than these chump change kickbacks called fines.
And no jail for anyone.
In one allegation, Citi telemarketers were said to have sold consumers identity theft protection services with a 30-day ‘‘free’’ trial, when no such free trial existed; or signed up consumers for an add-on service when it was ambiguous whether the consumers actually said they wanted it. In another situation, Citi sold credit monitoring services when Citi wasn’t performing such services at all, or was not actively monitoring a consumer’s credit file with credit reporting bureaus.
Citi also allegedly misrepresented its customers by charging a $14.95 ‘‘expedited’’ payment fee to customers who made over-the-phone payments and did not tell consumers about no-fee options.
Credit card add-on services were a lucrative source of revenue for banks for several years, sold as ways to protect consumers’ credit scores or identities or protect them if they lost their jobs. Banks’ marketing of such services largely ended after increased regulatory scrutiny.
They are thieves, just like the airlines -- who made a record $19.7 billion in profits!
While credit card companies have largely ended the practice, Nick Bourke, a consumer lending expert at the Pew Charitable Trusts, and other consumer financial advocates said the products are still sold by some high-cost installment loan providers and payday lenders.
Citi said it stopped the practices and has been issuing credits since 2013 to affected customers. For the customer who no longer has an account at Citi, a check will be mailed.
Citi has already set aside the money to pay for the settlement, a spokeswoman said.
Citigroup shares rose 25 cents to $59.10 Tuesday, despite a broad market decline.
That's the mo$t important thing: the $tock price.