The United States Consumer Financial Protection Bureau (CFPB) on Tuesday ordered Citibank to pay $700 million to borrowers for consumer relief over illegal credit card practices. The federal consumer watchdog said that the financial services company would have to pay about 7 million people affected by "deceptive marketing" practices misrepresenting costs and fees associated with credit cards and charging for services that had not been received, according to Reuters.
Citibank was ordered to provide $479 million in consumer relief to roughly 4.8 million accounts for deceitful marketing or retention actions, according to the Hill, and about $196 million to 2.2 consumers who paid for and enrolled in credit monitoring products but did not receive all the promised services. Citibank also was ordered to pay $35 million in civil penalties to the CFPB, reports Reuters.
"We continue to uncover illegal credit card add-on practices that are costing unknowing consumers millions of dollars," said CFPB Director Richard Cordray, reports The Hill. "In our four years [since the CFPB launched] this is the 10th action we've taken against companies in this space for deceiving consumers."
Citibank is the consumer division of Citigroup Inc., which agreed to pay a $7 billion settlement with the Justice Department in July 2014. $2.5 billion of the settlement was to be paid in consumer relief to homeowners for misleading investors about precarious mortgage-backed securities leading to the 2008 financial crisis, according to the Wall Street Journal.
The CFPB was formed in 2010 as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act in the wake of the 2008 financial crisis in order to protect consumers from predatory loans and deceptive financial practices. As of July 20, the CFPB has provided roughly $10.1 billion in relief to consumers and has imposed $286 million in fines from financial institutions, according to the Wall Street Journal.