CFPB Sues Citizens Bank For Violating Truth In Lending Act

Citizens Bank faces legislation from the CFPB.

The Consumer Financial Protection Bureau (CFPB) filed a lawsuit on Thursday (Jan. 30) against Citizens Bank over alleged violations of the Truth In Lending Act (TILA). It filed the complaint in the U.S. District Court for the District of Rhode Island.

The CFPB said that Citizens Bank neglected to follow the rules for years by failing to properly manage credit card disputes. Specifically, the bank violated amendments to the Fair Credit Billing Act (FCBA) and the Credit Card Accountability Responsibility and Disclosure Act (CARD Act).

According to the complaint, Citizens Bank automatically denied customers’ billing error notices and claims of unauthorized use in certain circumstances. It also failed to refund finance charges and fees in full after customers brought up legitimate disputes or fraud claims.

Citizens Bank reportedly failed to send customers proper notice of billing errors — the required acknowledgment letters or denial alerts. For several years, the bank also violated TILA and Regulation Z by not providing credit card counseling referrals to customers who called and asked for that service on Citizens’ toll-free number.

For the numerous violations, the CFPB is seeking an injunction against the defendant, and the imposition of civil money penalties. The violations all constitute breaches of the Consumer Financial Protection Act, according to a press release.

The CFPB has already started off 2020 with a bang, as it has stated that it’s changing the definition of “abusive practices” in finance. Going forward, it will limit the definition of those practices, due to uncertainty and vagaries as to what constituted those practices. That may lead to fewer fines and actions taken against firms.

Meanwhile, states are pursuing their own agendas, with both New York and California pursuing new regulations against debt collectors.

The CFPB has also been among those pursuing action against Wells Fargo for various misdeeds, which have racked up $4 billion in penalties against the bank.