Is Citibank $700 million in debt to its own customers? According to a ruling by the federal government on Tuesday, they are. The ruling states that the financial institution used deceptive practices to get customers signed up for benefits that were misrepresented.
The bank has been ordered to send a refund check or reimbursement to all qualifying customers, present and possibly past, who signed up for services like credit monitoring and debt forgiveness.
According to CNN, no institution can promise a fully functioning credit monitoring service, and it is suggested that the customer check their credit rating themselves. This also applies to keeping tabs on account activity, with the responsibility still lying fully on the account owner. If you see charges you didn’t authorize, take action and report it. Your financial institution should look into the possible breach and, in extreme cases such as identity theft, issue a new card.
Part of what led to the Citibank $700 million payback was overcharged fees that the Consumer Financial Protection Bureau says came directly from Citibank. The fees may or may not have been involved in their debt forgiveness service. They had promised customers that in the event of financial hardship or job loss, debts like loans and Citibank credit cards could be put on hold until regular payments can once again be made.
Citibank to refund $700 million for illegal credit card practices: Citibank has agreed to refund an estimated… http://t.co/NWcZJZDuCL
— InvestorBull (@InvestorBull) July 21, 2015
Citibank has been involved in making things right for a while now, having paid some customers back in 2013. Other refund checks are still on their way for customers signed up for services that didn’t work as promised.
Many of the 8.8 million customers involved were either sold the services unknowingly or never saw the promised benefit from them. The Washington Post has stated that some who did receive benefits weren’t given the full amount stated in the contract. Telemarketers had even sold a 30-day trial on services, and those customers were charged within the time frame anyway.
In addition to Citibank paying $700 million back to its customers, the institution must also pay a combined civil penalty of $70 million to the CFPB and the Office of the Comptroller of the Currency.
[Image via YR&GXYZ]