Citi fined by US regulators for illegal and deceptive practices

Following the decision, Citi will issue refunds to 8.8 million affected consumers who paid for ‘add-on’ products and will pay two separate USD 35 million fines to the Consumer Financial Protection Bureau (CFPB) and to the federal bank regulator the Office of the Comptroller of the Currency.

The source mentions that 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 consumer actually said they wanted it. In another situation, Citi sold credit monitoring services when Citi wasnt performing such services at all, or were not actively monitoring a consumers credit file with credit reporting bureaus.

Citi also allegedly misrepresented its customers by charging a USD 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 to consumers as ways to protect their credit scores or identities or protect them if they lost their jobs. Banks marketing of such services largely ended after increased regulatory scrutiny.

In a statement, Citi said it stopped the practices and has been issuing statement credits since 2013 to the affected customers. For the customer who no longer has an account at Citi, a check will be mailed.