Citigroup Inc. has been ordered to pay an estimated $700 million
to customers the Consumer Financial Protection Bureau says were
harmed by illegal marketing and billing practices. Citi and its
subsidiaries will also have to pay $70 million in civil penalties
to regulators.
The enforcement action announced Tuesday morning is tied to the
lender's marketing and billing tactics ranging from 2000 to 2013 of
credit card add-on products, including credit-monitoring and
debt-protection services. The action also states some customers
were deceptively enrolled in these programs and that some services
promised weren't provided.
This marks the 10th action the CFPB has taken since 2012 against
major lenders for their marketing and billing practices pertaining
to add-on products that they have sold to consumers. The bureau had
previously fined Capital One Financial Corp., J.P. Morgan Chase
& Co., American Express Co., Bank of America Corp., among
others.
Citigroup, which had previously disclosed the investigation,
said it has already been refunding affected customers since 2013.
It said it had cooperated fully with regulators.
Lenders ramped up sales of add-on products, in particular
services that promise to monitor consumers' credit reports for
signs of identity theft or other fraudulent actions, in the wake of
the recession as consumers became more concerned about their credit
standing. Lenders or companies they had partnered with up charged
consumers on a monthly basis for these services.
Write to AnnaMaria Andriotis at annamaria.andriotis@wsj.com and
Christina Rexrode at christina.rexrode@wsj.com
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