US bank Citigroup must pay $US700 million to customers and another $US70m in federal fines for misleading consumers on credit card add-on products.
The $US700m is intended to compensate nearly nine million account holders who were victims of dishonest marketing by Citigroup and affiliates when they ordered fraud alerts, credit monitoring and other services with their credit cards. “We continue to uncover illegal credit card add-on practices that are costing unknowing consumers millions of dollars,” said Richard Cordray, director of the Consumer Financial Protection Bureau on Tuesday.
“In our four years, this is the tenth action we’ve taken against companies in this space for deceiving consumers. We will remain on the lookout for similar conduct and will address it as we find it.” In some cases, telemarketers took orders for add-on products without informing the consumer of the cost, or by promising “free” 30-day trials that were actually billed, the CFPB said.
In other instances, Citigroup charged consumers for benefits they did not receive, or misrepresented the nature of fees. In addition to the compensation for consumers, the fourth-largest US bank by assets must pay $US35m each in fines to the CFPB and the Office of the Comptroller of the Currency. The Citigroup penalties follow fines imposed by the CFPB on JPMorgan Chase, Bank of America and others for illegal practices in credit card add-on programs.