CFPB Fines Citizens Bank For Pocketing Deposits

Citizens Bank has been ordered to pay $18.5 million in penalties tied to regulators’ findings that the lender did not credit consumers with the full amounts of their deposited funds.

The penalties, announced Wednesday (Aug. 12), are the result of actions against the bank taken by the Consumer Financial Protection Bureau (CFPB), the Federal Deposit Insurance Corp. (FDIC) and the Office of the Comptroller of the Currency (OCC).

The fines include $11 million in customer refunds and an additional $7.5 million in penalties tied to the violations.

In essence, Citizens Bank withheld money from deposit discrepancies when receipts did not in fact match actual funds transferred to customers. In a statement by CFPB Director Richard Cordray, “the bank chose to ignore these discrepancies and harmed many consumers by pocketing the difference.”

The action extends against Citizens Bank, N.A., Citizens Financial Group and Citizens Bank of Pennsylvania. The institutions operate in roughly a dozen states across the U.S.

During a period spanning Jan. 1, 2008 to Nov. 30, 2013, the bank violated Dodd-Frank policies on unfair and deceptive practices, the CFPB said. Customers would make out deposit slips tallying amounts being deposited into accounts and the total. Then, upon making the transaction, the consumer in turn received a receipt from the bank, and that receipt was then scanned at a central location. If totals on the receipts did not match those noted on the original slips, the errors in many cases remained uncorrected, and Citizens Bank in effect pocketed millions of dollars. The bank only examined discrepancies greater than $25, or in some cases, $50.

The $11 million earmarked to redress victims includes money that should have been deposited into accounts, with any fees that may have been related to the “undercrediting,” such as overdraft fees, insufficient funds fees and/or maintenance fees.

The FDIC separately ordered Citizens Bank of Pennsylvania to pay a $3 million civil penalty and restitution. The OCC ordered Citizens Bank, N.A. to pay $10 million in civil penalties, and the total, according to the statement, comes to $11 million in consumer refunds and $20.5 million in penalties.

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