Citizens Bank fined $9 million for mismanaging fraud complaints
A Citizens financial institution department in New York, on Friday, March 24, 2023.
Alex Kent | Bloomberg | Getty Images
WASHINGTON — The U.S. Consumer Financial Protection Bureau has issued a $9 million high quality in opposition to one of many largest client banks within the nation for violating federal client monetary regulation and failing to correctly course of bank card disputes, in keeping with a judgment launched Tuesday.
The company resolved its 2020 lawsuit in opposition to Rhode Island-based Citizens Bank for violating the Truth in Lending Act, which protects customers in opposition to unfair credit score billing and bank card practices. The CFPB mentioned in its swimsuit that the financial institution robotically denied fraud claims and billing error notices in sure circumstances.
In addition, Citizens uncared for to totally refund prices and charges, and the financial institution didn’t situation necessary acknowledgement letters and denial notices in response to billing errors, in keeping with the lawsuit.
“Federal regulation offers necessary rights to credit score cardholders when disputing transactions and resolving billing errors,” CFPB Director Rohit Chopra mentioned in a press release. “As excellent credit card debt approaches $1 trillion, the CFPB might be intently watching the conduct of the bank card trade.”
Under TILA, bank card issuers are required to analyze all fraud claims and refund the quantity in query plus any related charges if unauthorized use is discovered. But Citizens robotically denied unauthorized use claims and billing error notices to clients who didn’t return the financial institution’s fraud affidavit, in keeping with the judgment.
Automatic denials additionally had been issued when customers refused or couldn’t adjust to a statute requiring notarization for the affidavit or the promise to seem in court docket, the swimsuit mentioned. In addition, CFPB mentioned Citizens rerouted requests for referrals to credit score counseling organizations from its designated toll-free line to common customer support or collections primarily based on account standing.
The malpractice started in no less than 2010 and endured into early 2016, in keeping with the swimsuit.
Citizens Bank famous that the difficulty concerned a small subset of its bank card clients.
“While Citizens continues to disagree with the CFPB’s stance with respect to those long-resolved points, which had been self-identified and voluntarily addressed years in the past, we’re happy to place this matter behind us,” mentioned Polly Klane, common counsel of Citizens.
Apart from the $9 million penalty to the CFPB’s victims reduction fund, Citizens should guarantee its bank card practices adjust to the regulation and stop enacting the fraud affidavit, in keeping with the discharge.
Citizens Bank is among the many 15 largest client banks within the U.S. with branches and ATMs in 14 states and Washington, D.C. It is a subsidiary of Citizens Financial Group, which reported $222 billion in belongings as of March 31.