On the fifth anniversary of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Consumer Financial Protection Bureau (CFPB) celebrated in a large way by making the consumer bank of Citigroup, Inc. part with $770 million for credit card misconduct. According to the CFPB, the bank failed to properly disclose to its credit card customers the costs of add-on products such as credit monitoring (“IdentityMonitor” or “DirectAlert”), misled customers about bill-paying fees or bill-deferral programs (“Credit Protection” and “Balance Protector”) and failed to provide certain credit products (“Access to 3-in-1 credit reports”).
The settlement, in which the bank neither admits nor denies culpability, requires refunds of roughly $700 million to its millions of affected customers and payment of $35 million each to the CFPB and the Office of the Comptroller of the Currency. The bank has already made refunds to a couple million customers and discontinued the credit add-on services. Customers will receive credits to their accounts or checks as compensation.
Citigroup is the latest in a series of financial institutions being penalized by the CFPB for questionable practices. As reported by GoodCredit.com, other companies which have recently settled similar lawsuits include JPMorgan Chase & Co., Capital One, American Express and According to the CFPB, the Citigroup settlement is the tenth such case. The amount to be paid by the bank is roughly 1% of the company’s estimated revenue for this year, and is just part of over $17 billion that it has paid in settlements and fines over the last several years.