Do You Have a Citibank Card? Because Your Bank Just Got Hit Hard for Shady Practices.


Photo by Mario Tama/Getty Images

Here’s a cautionary tale of marketing gone wrong. From 2003 to 2012, perhaps longer, Citibank promoted and signed up customers for several debt-protection add-ons to its credit cards: “AccountCare,” “Balance Protector,” “Credit Protection,” “Credit Protector,” and “Payment Safeguard.” Citibank also sold various credit-monitoring and fraud-protection services. The add-ons were essentially hedges—they’d cancel or postpone a customer’s payment should certain bad things happen, like job loss, disability, or hospitalization. Or, in the case of the credit and fraud-monitoring service, help inform the relevant parties if a card was lost or compromised.

The problem is that while Citibank was offering to monitor your credit card and protect your payments, no one was watching Citibank. And some of its marketing practices were pretty iffy. For one, telemarketers could be misleading about how much these add-on products cost. In some cases, Citibank scripts mentioned a “free” 30-day trial period, even though the bank would still charge consumers during the first 30 days. In others, Citibank said its fraud alerts would, well, alert consumers to fraud, when in reality the alerts weren’t monitoring changes made at the everyday transaction level. On top of all this, Citibank claimed a fee of $14.95 per account was for “processing” (so necessary-sounding!), and not just to expedite payment, as was actually the case.

During the roughly 10-year window that this went on, an estimated 7 million consumers were affected. Eventually, the Consumer Financial Protection Bureau noticed all of this, and on Tuesday the bureau ordered Citibank to pay up for “deceptive marketing,” “unfair billing,” and “other unlawful practices.” Citibank will hand over $700 million in relief to qualifying consumers, plus another $35 million in civil money penalties to the CFPB. It’s the 10th time the CFPB has fined a major financial services provider for misleading consumers, with previous targets including American Express, Bank of America, Capital One Financial, and JPMorgan Chase. In May, the bureau also hit PayPal with a $25 million penalty for tricking customers into using its credit service.

Citibank says in a statement that it began remediation for customers in 2013 and fully cooperated with the CFPB and the Office of the Comptroller of the Currency in resolving billing and marketing problems. Citi “has taken extensive steps to address each issue that affected consumers,” the bank says in a statement. Current Citi customers can expect to receive a statement credit or check automatically, and everyone else should look for one via mail. No $14.95 “processing” fee required.