CFPB

CFPB Fines Citi Over Illegal Debt Practices

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The Consumer Financial Protection Bureau said Tuesday (Feb. 23) that it has taken two separate actions against Citibank, tied to both illegal debt sales and illegal debt collection practices.

In a release, the bureau stated that, in the case of the first action, the bank was ordered to pay up as much as $5 million in consumer relief, with an additional $3 million paid for selling credit card debt that sported inflated interest rates. Elsewhere, charged the CFPB, the bank failed to send consumer payments made on that debt to the debt buyers themselves.

The second action, said the CFPB, is in reference to both Citibank and a number of debt collection law firms, and they were allegedly falsifying court documents that were used in debt collection cases in the state of New Jersey. Under the terms of that action, the CFPB has ordered the firms involved to pay up a substantial amount, and Citibank has been ordered to repay $11 million to the consumers affected (as many as 7,000 of them), along with the order to forgo collecting $34 million from those consumers.

In a statement that accompanied the announcement of the actions, Richard Cordray, director of the CFPB, stated: “Citibank sent inaccurate information to buyers when it sold off credit card debt, and it also used law firms that altered court documents. Today’s action provides redress to consumers who were victimized by slipshod practices as part of our ongoing work to fight abuses in the debt collection market.”

The inaccurate and inflated APR information was relayed to as many as 130,000 credit card accounts it sold to debt buyers from 2010 to 2013 and did not forward payments of as much as $1 million, the CFPB said.

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