The CFPB, set up under the 2010 Dodd-Frank Act aimed at reforming Wall Street, has been cracking down in recent years on credit card companies offering payment protection, credit score tracking and other add-on products.
Citi will also pay civil penalties of $35 million each to the consumer finance watchdog and the Office of the Comptroller of the Currency.
The settlement is the CFPB’s tenth such case, Director Richard Cordray said in a statement. “They (the CFPB) are just marching through the industry,” FBR & Co financial policy analyst Edward Mills said.
“The CFPB loves to have big numbers like this, especially when the largest per centage of the fine goes back to customers because there’s a lot of (political) push-back about the cost of the CFPB and the way they’re funded.”
Other major US banks under that have been fined over credit card misconduct include JPMorgan Chase & Co and Bank of America Corp.
FINE DETAILS: Tuesday’s settlement is about 1 per cent of the bank’s estimated revenue for 2015, according to Thomson Reuters StarMine.
“Citi is fully reserved to pay costs associated with the agreements,” the bank said in a statement.
As of May 21, Citi had paid out over $17 billion in fines and settlements since the financial crisis.
The CFPB said that about 7 million customer accounts were affected by Citibank’s “deceptive marketing” practices, which included misrepresenting costs and fees and charging customers for services they did not receive. A Citibank unit also “deceptively” charged nearly 1.8 million consumer accounts often unnecessary same-day payment fees while collecting payments, the CFPB said. — Reuters
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