Citizens will pay a $9 million civil money penalty to resolve CFPB’s allegations that Citizens Bank, a subsidiary of Citizens Financial Group, failed to properly manage and respond to customers’ disputed credit card transactions and claims of fraud, the CFPB said in a Tuesday (May 23) press release.
“Federal law provides important rights to credit cardholders when disputing transactions and resolving billing errors,” CFPB Director Rohit Chopra said in the release. “As outstanding credit card debt approaches $1 trillion, the CFPB will be closely watching the conduct of the credit card industry.”
Commenting on the settlement, Citizens Financial Group said in a Tuesday press release that the complaint related to billing errors and associated issues, that the issues impacted about 2% of Citizens’ credit card customers and that they happened nearly eight years ago.
Citizens identified the errors in 2015, reported them to the CFPB and voluntarily began and completed remediation efforts shortly after discovering the issues, according to the release.
“While Citizens continues to disagree with the CFPB’s stance with respect to these long-resolved issues, which were self-identified and voluntarily addressed years ago, we are pleased to put this matter behind us,” Citizens General Counsel Polly Klane said in the release. “We remain proud of our commitment to transparency, our rigorous compliance programs and our consistent effort to treat customers fairly and operate responsibly.”
In a 2020 lawsuit, the CFPB alleged that Citizens Bank violated the Truth in Lending Act by improperly denying customer reports of fraud and errors and failing to provide refunds, and by failing to provide documents and referrals, according to the CFPB’s press release.
Specifically, it alleged that the bank made customers “jump through unnecessary and burdensome hoops” to report fraud, sometimes failed to refund all finance charges or fees owed to customers, did not provide certain individuals with required acknowledgment and denial notices in response to their billing error notices, and did not disclose required credit counseling information to individuals who called the bank’s toll-free number designated for that purpose, the release said.
In other news around the Truth in Lending Act, the CFPB said in a preemption determination in March that states can continue extending disclosure laws covering lending to businesses.
Such state laws are not inconsistent with or preempted by the act, the CFPB said when announcing that determination.