Citigroup once again faces government fines for committing fraud in its credit card division. On February 23, the Consumer Financial Protection Bureau (CFPB) fined Citigroup and its consumer division Citibank for the way it handles selling credit card debt.
The CFPB ordered Citigroup to pay $8 million — $5 million in restitution and $3 million in fines — for “selling credit card debt with inflated interest rates and for failing to forward consumer payments promptly to debt buyers.”
In a separate action, the CFPB ordered Citibank to comply with a court order from New Jersey which requires the bank to pay $11 million to consumers and forgo the collection of roughly $34 million from an estimated 7,000 consumers. The court order came after it was revealed that Citibank had lied about how high the interest rate was on the debt being sold to collection agencies, while also not forwarding payments customers made to the companies that had bought those debts.
To recap, if you had a credit card debt with Citigroup/Citibank and did not pay it on time, Citigroup would sell that debt to a collection agency and claim you had a higher interest rate on the debt (to increase price) and, amazingly, if you eventually paid Citigroup, they would not tell the collection agency who was still coming after you.
And, if this was not a scummy enough case, lawyers for Citigroup were found to have been altering affidavits filed in debt collection lawsuits to match the fake figures Citigroup used when selling the debt. The two law firms involved, Faloni & Associates, LLC and Solomon & Solomon, P.C., must pay $15,000 and $65,000 respectively for their crimes.
Facing fines for fraudulent credit card practices is nothing new for the Too Big To Fail bank. Last July, Citigroup was forced to pay $770 million for tricking customers and charging for services the bank never provided. $700 million from the settlement went back to customers, while $70 million was paid in fines to the CFPB and the Office of the Comptroller of Currency.
Obviously, the fines did not do much to deter Citigroup from further criminality. Of course, in September, Sally Yates, the deputy attorney general, claimed the Justice Department would finally start focusing on prosecuting corporate executives for financial crimes.
So, what are they waiting for?