After Citibank, N.A. allegedly violated the Truth in Lending Act by failing to reevaluate and reduce the annual percentage rates (APRs) of consumer credit card accounts, the Bureau of Consumer Financial Protection (CFPB) announced that it has reached a settlement with the bank. With the terms of the consent order, Citibank must pay $335 million in restitution to affected consumers and “correct” those practices, the bureau said in a press release.
But the bureau said it did not assess civil money penalties against Citibank. That decision was based on a number of factors: Citibank, for example, self-identified and self-reported the violations to the bureau. In addition, the bureau said that Citibank self-initiated remediation to consumers affected by the practices.
The news comes after The CFPB announced in November that it had taken enforcement action against Citibank for what the government watchdog said were failures in student loan servicing that hurt borrowers. According to a press release published by Consumer Finance, the CFPB contended that Citibank misled borrowers by making them think they were ineligible for a tax deduction on interest paid on student loans.
In addition, the CFPB had asserted that the bank incorrectly charged late fees and added interest to the loan balances of borrowers, though they were still in school and eligible to defer student loan payments. On top of that, the CFPB said Citibank misled consumers about monthly bills and didn’t disclose information when it denied borrowers’ requests to release their cosigners. Citibank had to pay $3.75 million to consumers and a $2.75 million civil money penalty to right the wrongs, it was reported at the time.
“Citibank’s servicing failures made it more costly and confusing for borrowers trying to pay back their student loans,” CFPB director Richard Cordray said in a press release at the time. “We are ordering Citibank to fix its servicing problems and provide redress to borrowers who were harmed.”