WASHINGTON (7/22/15)--Federal regulators handed down a total of $770 million in penalties to Citibank Tuesday, as a result of a number of alleged illegal practices.
The Consumer Financial Protection Bureau (CFPB) has ordered Citibank N.A. and its subsidiaries to provide roughly $700 million in consumer relief and a $35 million penalty, while the Office of the Comptroller of the Currency (OCC) assessed a $35 million penalty.
The CFPB found that Citibank and its subsidiaries marketed or offered credit card add-on products to consumers nationwide between 2003 and 2012. The products promised to cancel a consumer’s payment or balance, or defer the payment due date, if the consumer experienced certain hardships.
These products were marketed deceptively, affecting roughly 4.8 million consumer accounts. These deceptions included misrepresentation of fees for coverage, misrepresenting benefits, illegal enrollments and omitting information about coverage eligibility.
The bureau also alleges Citibank charged consumers for benefits they did not receive and failed to provide product benefits.
The OCC found that Citibank’s billing and marketing practices violated the Federal Trade Commission Act. The $35 million civil money penalty reflects the scope and duration of the violations and will be paid to the U.S. Treasury.
The OCC order also requires the bank to improve governance of third-party vendors associated with add-on consumer products, develop a risk management program for add-on consumer products, develop a consumer compliance internal audit program for such products and conduct an add-on product review.