CFPB: Citi to Pay $770 Million for Marketing and Billing Practices Related to Credit Card Add-On Services (July 21, 2015)
As the Dodd-Frank Act turns 5 today, the CFPB is making good on its consumer protection mandate, announcing today a new enforcement action. The CFPB has ordered Citibank to pay $700 million in relief to customers for what the agency describes as deceptive marketing and billing of credit card add-on products and services from 2000 through 2012. Citi, which neither admits or denies the allegations, also must pay the CFPB and OCC $70 million in civil penalties. The announcement marks the CFPB’s 10th enforcement action in the four years it’s been in operation, said CFPB Director Richard Cordray, who added that the agency remains “on the lookout” for similar violations.
In its investigation, the CFPB said Citi and its subsidiaries used unfair marketing tactics for several different debt protection and credit monitoring services it offered consumers, affecting more than 7 million accounts. Citi also misled consumers about the details of expedited payments during collection calls for overdue credit card accounts, according to the CFPB. Citi used deceptive marketing and billing practices, misrepresenting the cost and fees for many of these services, the CFPB said. For example, when consumers applied for credit cards at retail POS locations, “confusing text” on the PIN pad made it likely consumers wouldn’t realize they were simultaneously signing up for debt-protection coverage, the CFPB said. No matter what type of financial products or add-on services you’re offering, the message from the CFPB is clear—transparency and clarity are required throughout the marketing, signup and product delivery process.
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