naked capitalism
Corruption“Bank of America, Goldman Sachs Group (GS) and J.P. Morgan Chase are among 22 financial companies accused of colluding to manipulate auctions of U.S. Treasury securities in a lawsuit filed by investors” [Pensions and Investments]. “The $4.1 billion State-Boston Retirement System alleged the so-called primary dealers used electronic chat rooms and instant messages to inflate the prices of Treasuries they sold to investors and to deflate the prices they paid for those Treasuries at auction.” Why, the ingratitude! After all we did for them in the bailouts!
“Members of Congress, influential government contractors and high-ranking federal officials have a symbiotic relationship when it comes to managing the country’s nuclear weapons research and design facilities” [Reveal].
Citi to pay $700M for deceptive credit card marketing
Kevin McCoy, USA TODAY 3:55 p.m. EDT July 21, 2015
Citibank and its subsidiaries Tuesday were ordered to pay $700 million in consumer relief for illegal practices related to credit card add-on products and services.
A consent order issued by the Consumer Financial Protection Bureau said about 7 million consumer accounts were affected between 2003 and 2012 by the bank's deceptive marketing of five debt protection products and additional add-ons that offered credit monitoring.
The alleged illegal practices included:
- Marketing that misrepresented or failed to inform consumers about the cost of the products. Although Citibank told its telemarketers to offer "free" 30-day trials, the bank still charged customers for coverage during that period.
- Falsely claiming the fraud-alert services would notify customers of fraudulent purchases. Instead, the monitoring only provided alerts to changes in customer credit files maintained by major credit-reporting firms.
- Using leading or vague questions to sign customers up for credit card add-ons without specific authorization.
- Enrolling customers in the programs and charging them for the services even though the customers were ineligible for coverage.
"We continue to uncover illegal credit card add-on practices that are costing unknowing consumers millions of dollars," said CFPB Director Richard Cordray. "In our four years (of existence), this is the tenth action we've taken against companies in this space for deceiving consumers."
Citibank (C) said it cooperated with investigations by the CFPB and the U.S. Office of the Comptroller of the Currency and began taking corrective actions to reimburse customers in 2013.
"Citi will continue to notify and refund affected customers," the bank said. "Affected customers will automatically receive a statement credit or check, and those no longer with Citi who are eligible will be mailed a check.
"Citi continually reviews our policies, processes, systems and controls so that all of our products and practices meet or exceed the high standards that both we expect and our customers deserve."
The $700 million in customer relief paid by Citi includes about $479 million for an estimated 4.8 million consumer accounts harmed by the deceptive marketing or retention practices. The bank will also pay roughly $196 million to the estimated 2.2 million consumer accounts that failed to receive promised credit-monitoring services.
Additionally, Citi will pay $70 million in cumulative penalties to the CFPB and the Office of Comptroller of the Currency and agree to be barred from marketing add-on products to customers until the bank submits a compliance plan to the consumer agency.
A Citibank subsidiary known as Department Stores National Bank must provide approximately $23.8 million in relief to nearly 1.8 million consumer accounts for charging expedited payment fees, the CFPB said.
Citibank said it was fully reserved for costs associated with the payments and had previously disclosed the investigations to investors.
Shares of parent firm Citigroup (C) were up 0.4% at $59.11 in afternoon trading.