Why Citi is Paying $700 Million to their Customers?
Today, the Consumer Financial Protection Bureau (CFPB) ordered Citibank and its subsidiaries to pay $700 million in consumer relief. This charge comes from deceptive credit card marketing – specifically related to add-on products and services.
The services that are now under investigation include protection products and credit monitoring. However, these products were misrepresented through Citi’s marketing. Citi claimed they offered a fee trail period, but then turned around and charged customers during that period. They also made false statements about the capabilities of their fraud-alert services.
The Director of CFPB, Richard Cordray, says that his bureau is continuing their investigation of Citi, and that Citi’s practices are costing U.S. consumers millions of dollars.
To date, CFPB estimates that between 2003-2012, more than 7 million Citi customers were affected by the deceptive marketing tactics. These customers, past and present, will be notified and compensated.
On top of the $700 million owed to consumers, Citi will be paying the Office of Comptroller of the Currency and CFPB $70 million in penalties.
Moving forward, Citi will not be allowed to advertise any add-on products unless they submit a marketing plan and get approval from CFPB.