In 2018, Citibank reached a settlement with the Consumer Protection Financial Bureau (“CFPB”) regarding the company’s alleged failure to review and potentially decrease its annual percentage rate(s) (“APR”) for a portion of its customers’ credit cards.  The CFPB found Citibank to be in alleged violation of the federal Truth in Lending Act, 15 U.S.C. §§ 1601-1667f, as amended.  As stated by this federal law, banks are required to conduct reviews every six months to decide whether or not its customers are able to receive reduced APRs, as determined by various market conditions and credit risk.  The company claimed that around 90 percent of its account holders’ interest rates were fairly evaluated, but they allegedly still sent out refunds totaling up to $335 million dollars, to about 1.75 million customers.  They allegedly estimated that individuals would receive around $190.00 each by the end of the year.  Citibank allegedly was not fined any additional penalties by the CFPB since it reported the issue quickly and accordingly.

Creditors such as banks, and credit card companies, cannot robocall your cell phone with an automated telephone dialing machine, with the capability for predictive dialing, after you have told them to stop calling, whether you owe them money or not.  If you are continuing to get such harassing and unwanted phone calls, then the company bothering you could very well be in violation of the Telephone Consumer Protection Act, 47 U.S.C. § 227, et seq. (“TCPA”).  Businesses that are found to be in violation of consumers’ rights, could be found liable for $500.00-$1,500.00 per violative call; so for every call that they have made to the consumer after the consumer has told them to stop calling.  This includes situations where they are calling the wrong consumer.  People have, in numerous states in America, a right to privacy that is recognized by the courts.  Congress enacted the TCPA, a federal statute, in order to try to help protect those rights.  While people may be in default on a debt, and owe a creditor money, that does not mean that a creditor is allowed to collect from them in an illegal manner.  Creditors should always utilize lawful means in order to try to collect on a debt.

Others Matters Involving Citibank and the Consumer Financial Protection Bureau

In 2015, Citibank was involved in a case with the Consumer Financial Protection Bureau.  The CFPB allegedly found that Citibank used illegal practices regarding its add-on products for credit cards and hurt its customers in the process.  More specifically, the company was allegedly said to have used deceptive marketing tactics for five of its debt protection products (“AccountCare”, “Balance Protector”, “Credit Protector”, “Payment Safeguard”, and “Credit Protection”) and other products (“IdentityMonitor”, “Citi Credit Monitoring Services”, “PrivacyGuard” and “Watch-Guard Preferred”).  Its debt protection products allegedly were marketed as being able to either cancel or defer a customer’s payment if they happened to be affected by certain hardships, and its other products related to account security and monitoring.  It was found that nearly 7 million card and account holders were negatively impacted by Citibank’s actions.

Regarding its alleged practices of deceptive marketing, the CFPB allegedly determined that Citibank used deception during enrollment via telemarketers, websites, and retailers, and also during calls in which enrolled customers wanted to cancel their services. The CFPB allegedly found that the company’s violations included the following alleged actions:

• The CFPB concluded that during telemarketing calls, the callers allegedly either misrepresented or did not give information to customers about the cost and fees of the products and services they were advertising.  It was said that Citibank allegedly provided a number of scripts to telemarketers that promoted a free trial period of 30 days, where in reality, customers that signed up for this membership were still charged during that initial period.  In some other cases, the company allegedly did not reveal to customers that if they did not cancel their membership, they would be charged after the 30-day period ended.  The bank also allegedly told other customers that the fee could be evaded if they paid off their balance by the due date where in reality, customers actually had to pay their full balances by the end of their next billing cycle (which was alleged to be a sooner date in some cases).
• The CFPB concluded that Citibank allegedly falsely represented the beneficial capabilities of some of its credit-monitoring products.  The bank allegedly said that these products had fraud alert services that would alert account holders of suspicious activity and purchases.  However, these products allegedly did not actually alert consumers of individual transactions and only provided notifications for any changes in a customer’s credit file.  Furthermore, it allegedly was determined that Citibank also allegedly gave consumers false information about credit score calculation benefits.  It was believed that the company alleged that a customer’s credit score would be reported by major credit reporting companies but that the scores were actually calculated by a third-party company.
• The CFPB concluded that via its subsidiary, Citicorp Credit Services, Citibank allegedly engaged in illegal enrollment actions.  The company allegedly was said to have asked leading questions that led to customers complying to billing authorizations for certain products.  In some cases, customers who did not give explicit approval or those who gave inconclusive responses were all allegedly enrolled in product memberships and charged accordingly.
• The CFPB concluded that Citibank allegedly either misrepresented or left out information regarding benefit eligibility even after customers revealed information that would render them unable to receive certain coverages.  In these cases, it was observed that Citibank allegedly did not notify these customers and instead, still enrolled them in the products they were signing up for.

In addition to alleged deceptive marketing, the CFPB found that Citibank allegedly engaged in unfair billing practices.  Federal law states that most of the time, customers have to give authorization for banks or vendors to access their credit information in order to provide various add-on products.  Allegedly, in many cases, it was found that although Citibank billed its customers for the add-on products of credit monitoring, and credit report retrieval, it did not have the necessary authorization to provide these services. On other occasions, possibly due to issues of missing information, either Citibank or its vendors allegedly were not able to successfully deliver these services to the customer.  Thus, the CFPB determined that starting from 2000 (if not earlier) to 2013, Citibank carried out the following alleged acts that affect around 2.2 million account holders:

• The bank allegedly billed customers who either did not give authorization or who were not able to partake in the benefits.  It allegedly still continued to charge these individuals even though they were not receiving any services.
• Customers who believed that they were under the services of the add-on product allegedly may have been only partially monitored, if at all.

Additionally, the CFPB found that Citibank allegedly used deceptive collection practices, where in order for payments to be applied on the account the day of, Citibank offered its customers the option to pay by phone for some of its credit card accounts.  However, this form of payment came with a

$14.95 fee that Citibank allegedly mislabeled as a processing fee.  The fee was allegedly actually for expedited payments in order for the money to be posted on the account the same day.  Citibank allegedly did not tell customers the true purpose of the fee nor allegedly did it reveal any no-cost payments for them, so that many times, customers allegedly were charged these fees even though they did not need to make these rushed payments.

Given the alleged violations mentioned previously, the CFPB ordered Citibank to carry out the following actions:

• Citibank was told to provide a total of $700 million dollars in payment to around 8.8 million of its customers.  Of the total amount, $479 million dollars was given to the 4.8 million customers that were allegedly affected by the alleged deceptive marketing.  $196 million dollars was paid to the 2.2 million accounts who were signed up for and allegedly charged add-on products even though the stated services were not provided in full.  $23.8 million dollars was funded to the 1.8 million customers who were allegedly charged same-day payment fees.
• Citibank was told to reimburse customers who may have allegedly been negatively affected by its actions.  Account holders would not have to take any action to receive their refunds.  Citibank would initiate these reimbursements.
• Citibank was told to end their alleged deceptive billing practices for customers who were allegedly not being given the benefits they were charged for.
• Citibank was told to stop marketing its add-on products until it submitted a plan of compliance to the CFPB.
• Citibank was told to pay a $35 million disciplinary payment to the CFPB’s Civil Penalty Fund.

In late 2017, the Consumer Protection Financial Bureau found that Citibank allegedly committed violations regarding student loan services that allegedly negatively affected its customers.  It was stated that the allegedly bank misled, omitted, and/or gave false information to its borrowers and charged erroneous fees to some accounts.  Citibank has been a private student loan servicer for a number of years already and as such, they manage payments and provide customer support.  It is also their duty to supply their borrowers with account statements and tax information, as well as to monitor enrollment status and give possible deferments to payments.  More specifically, for the student loan accounts that Citibank was in charge of, the CFPB found that the company committed the following alleged wrongful actions:

• They allegedly misled customers regarding possible benefits to tax deduction.  By law, qualifying borrowers are able to reduce their student loan interest on select education loans by up to

$2,500 annually.  However, Citibank allegedly had information on their website and account holders’ statements that implied their borrowers did not pay the interest or were not able to receive this tax deduction.  Thus, allegedly many customers did not attempt to use this benefit, even if they may have qualified for interest reductions.

• Many times, students that are still currently in school are qualified to receive deferments on loan payments until six months after their graduation date (when they are not in school anymore).  However, Citibank was found to have canceled these postponements for select borrowers due to incorrect enrollment information.  As a result of this, customers were charged late fees for payments that they did not have to make. Citibank then added incorrect amounts of interest to the loan payments and did not repay these falsely charged fees.
• For customers who were categorized as “mixed-status borrowers” (those who had many loans with Citi), they often had loans in both repayment status and deferment status.  Payments were not required for deferred loans, though customers had the ability to pay them if they wished to do so.  However, Citibank allegedly often charged the minimum amount due for mixed-status borrowers as more than they should have been.
• At the time of application of these student loans, a large number of customers co-signed with another individual in order to guarantee the loan.  Some of these consumers then asked for their co-signers to be written off from the contracts of some or all of their loans.  After Citibank received applications to release the co-signers, they would make a decision based on credit information of the borrower.  Allegedly, if they happened to deny an application, Citibank (under the Fair Credit Reporting Act, 15 U.S.C. § 1681, et seq.) allegedly was found to have not provided their customers with the full information as to why.

As a result of these alleged violations, the CFPB required Citibank to engage in the following remediation actions:

• Citibank was ordered to repay $3.75 million to affected customers who allegedly were wrongly charged interest/late fees, who paid allegedly overstated account charges, and/or those who allegedly did not receive appropriate notices due to flawed service(s).
• Citibank was ordered to change the ways in which it conducted its services.  More specifically, the CFPB asked for Citibank to supply accurate student loan payment information, create a policy that would get rid of allegedly wrongly charged interest/late fees, and to provide more in-depth information to those who were not able to release their co-signers from their loans.
• Citibank was ordered to pay $2.75 million to the CFPB’s Civil Penalty Fund.

Citibank and Cases Involving Other Organizations

In May of 2016, Citibank was ordered by the Commodity Futures Trading Commission (CFTC) to pay a penalty of $425 million regarding alleged attempted manipulation and misreporting of currency-valuation benchmarks.  Out of the total settlement amount, it was reported that the

charge of $250 million was due to issues with the U.S. Dollar International Swaps and Derivatives Association Fix (USD ISDAFIX), a measure of value of interest rates calculated in dollars.  The other $175 million encompassed charges due to alleged manipulations by Citigroup Global Markets Japan of the yen LIBOR and euroyen TIBOR in multiple months of 2010.  The CFTC ordered Citibank to stop its alleged violations of the Commodity Exchange Act and to create new policies that would maintain obedience to and the integrity of standards like the USD ISDAFIX.

In January of 2018, the Office of the Comptroller of the Currency (OCC) announced that Citibank was fined $70 million dollars due to their alleged failure to follow a consent order regarding their policies against money laundering.  In 2012, Citibank’s policies relating to the Bank Secrecy Act (BCA) and its anti-laundering complying program were found to have alleged deficiencies and the company was asked to fix them.  The OCC found that Citibank allegedly did not take the necessary steps to correct and improve their compliance issues as directed by the 2012 order.  The OCC also said that the company allegedly often incompletely identified high risk customers and did not file suspicious activity reports on time.

Also in 2018, Citibank was alleged to have manipulated one of the most important global interest rate measures in the world, LIBOR.  Based on a selection of prominent currencies, LIBOR determines the price that banks pay each other and affects more than trillions of dollars of global loans like those for mortgages and consumer products.  Citibank settled this issue with 42 U.S. states and agreed to pay a fine of around $100 million dollars.  The settlement documented that a number of the company’s employees allegedly either hid or wrongfully reported their interbank loan payments via email and messages.  It also asserts that by allegedly fixing the interest rate, the company made profits of millions of dollars from various non-profit and governmental groups.

In September of 2018, it was announced that Citigroup would be fined $5 million dollars due to alleged uses of “robo signatures” for proofs of claim.  The U.S. Department of Justice found that the bank allegedly “robo-signed” many of these documents for bankruptcy cases regarding a large amount of Macy’s credit card accounts.  It was found that, between the years of 2012 and 2015, allegedly these proofs were filed by third-party individuals who either did not read the contents of the documents or did not have enough knowledge to understand the contents and were employed by Department Stores National Bank, a subsidiary entity.  The penalty of $5 million dollars was to be split between those allegedly affected by these actions, with each cardholder collecting around $70 dollars.

Also, in September of 2018, the Securities and Exchange Commission (SEC) found that Citigroup allegedly misled its dark pool users and charged the company a payment of around $17 million dollars.  The SEC claimed that Citigroup’s investors made payments in the belief that their trading activity was not being interfered with by other high-frequency traders.  However, it was alleged that Citigroup allegedly allowed high-frequency trading parties to gain entrance to Citi Match, a trading arena that was marketed as being free from computer-based traders.  The SEC found that Citigroup allegedly did not tell its customers that these high-frequency traders were, in fact, also trading in Citi Match and that it allegedly did not notify its investors that it had routed their trades to other venues outside of Citi Match.  While the company did not admit or deny these allegations, it chose to settle and paid the penalty as set out by the SEC.

This October of 2018, Citibank Europe (based in Dublin) was fined by the Central Bank of Ireland for allegedly violating its lending codes/codes of practice.  It was alleged that senior managers of the company received credit card services and loans without completing the correct authorization steps.  After an ensuing investigation, the Central Bank determined that the company allegedly did not have code-compliant policies or processes for an interval of almost three years.  The Central Bank said that Citibank Europe committed actions of alleged inaccurate reporting since many of the company’s supervisors allegedly could not accurately monitor the firm’s transactions with employees and related parties.  However, the investigation did determine that there was no evidence suggesting that related parties of the company were given better terms for loans than unrelated parties.  Citibank Europe was still fined €1.33 million euros for its alleged code breaches.

In November of 2018, the U.S. Securities and Exchange Commission (SEC) found Citibank to allegedly be in violation of conduct when dealing with their American Depositary Receipts (ADRs).  ADRs are negotiable securities traded in U.S. markets that represent the number of shares in a foreign company.  The SEC allegedly discovered evidence that Citibank allegedly improperly supplied these securities to brokers in numerous premature transactions and that the existing number of shares allegedly could not support the ADRs that were provided.  These actions then allegedly caused an inflation of the quantity of foreign securities, short selling, and dividend arbitrage.  While Citibank did not admit to or deny these allegations, the company agreed to pay a fine of over $38 million dollars.  The total amount was broken up as $20.9 million dollars for the alleged disgorgement of illegally acquired gains, $4.2 million dollars for prejudgment interest, and $13.5 million dollars as a penalty.

A number of lawsuits against Citibank have been filed.  Citibank is a creditor for many consumers.  Some individuals have filed suit against different creditors – such as banks – citing alleged violations of the Telephone Consumer Protection Act (“TCPA”).  These individuals allege claim(s) that creditors have harassed them with phone calls to their cell phone, without the consumer’s express consent.  Some consumers allege that creditors have called them numerous times with automatic telephone dialing machine systems, also known as robo-calling them.  Many creditors will leave unwanted pre-recorded messages if they do not reach the consumer on the phone.  Many consumers allege that they have asked the employees and agents of creditors multiple times to stop these unwanted calls, but that they continue to receive them.  Sometimes, the creditor is calling the wrong person’s cell phone number, but the calls continue.

If a consumer is receiving harassing phone calls from a creditor, after the consumer told the creditor and/or its agent(s) to stop calling, the consumer should contact the Consumer Financial Protection Bureau, their respective state’s Attorney General’s Office, and a law firm for help.  If a creditor keeps robo-calling a consumer, after the consumer has told it to stop calling, it could owe the consumer $500-$1,500 dollars per call if it has been using an automated telephone dialing machine with the capability for predictive dialing.  No one should ever be getting harassing, unwanted phone calls, whether they owe money to a creditor or not.