C Citigroup Inc

   By Micah Maidenberg 
 

Citigroup Inc. has agreed to pay $5 million to some users of Macy's Inc.-branded credit cards, after vendors that provided services in consumer bankruptcy cases carried out their duties by relying on so-called robo-signing technology.

Between 2012 and 2015, tens of thousands of proofs of claim--the forms creditors use to seek funds from people or entities going through bankruptcy--were "improperly signed" using the technology, according to a statement Monday from the Justice Department.

The situation emerged out of an arrangement between a Citibank affiliate and Macy's-owned FDS Bank. The Citi affiliate issued Macy's-branded cards, with FDS responsible for servicing them, according the Justice Department's statement. FDS hired contractors to carry out various bankruptcy-related services.

"In some cases, the electronic credentials of the vendor's employees were used to file claims where the employee did not review the claim," the statement said. Macy's did not immediately respond to a request for comment.

In late 2015, Citi began servicing the accounts itself and discovered the practices. A Citi spokeswoman said it halted the vendor's filings and reported the problem to the executive office of the U.S. Trustee Program, which oversees case administration in federal bankruptcy courts.

The spokeswoman added that Citi was pleased to have resolved the issue and regretted any inconvenience to customers. The $5 million the bank agreed to pay will flow to affected cardholders, who will receive refunds of $70 per account, she said.

Write to Micah Maidenberg at micah.maidenberg@wsj.com

(END) Dow Jones Newswires

September 24, 2018 18:15 ET (22:15 GMT)

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