* Citigroup drops plan to impose fees, Cuomo says
* Customers may save millions of dollars, Cuomo says
* Bank says pleased to settle, denies violating law
* Citigroup shares rise 2 cents
(Adds bank denying law violations, closing stock price)
By Jonathan Stempel
NEW YORK, Feb 1 Citigroup Inc (C.N) has shelved
plans to impose new fees on more than a million customers
nationwide who took out "free checking" accounts with its
Citibank unit, New York Attorney General Andrew Cuomo said.
The New York-based bank's agreement with Cuomo's office
requires Citigroup to extend free checking through 2010 for
consumers who signed up for its "EZ Checking" and "Access"
checking accounts between Jan. 1 and Nov. 5, 2009. Citigroup
will also not charge fees on checks through Jan. 31, 2011.
Cuomo said the bank had planned beginning on Monday to
assess monthly fees, typically $9.50, plus per-check charges of
50 cents or $1 to account holders whose balances fell below
$1,500. He said the settlement saves customers tens of millions
"Let all banks take notice: If you are going to change
terms, and you think you are going to increase the fees you are
charging consumers, make sure you do it legally, make sure you
respect the consumers' rights, and make sure you give notice,"
Cuomo said on a conference call.
"Free checking means free checking," he added.
Citigroup spokesman Mike Hanretta said the bank was pleased
to settle. The bank denied any law violations, the settlement
Cuomo contended that Citigroup planned to impose the fees
without properly notifying customers, and failed to disclose in
advertisements that it had discretion to end free checking.
Checking was free on the accounts so long as customers used
direct deposit services or made two monthly online bill
payments, Cuomo's office said.
Citigroup shares closed up 2 cents at $3.34 on the New York
(Reporting by Jonathan Stempel; Additional reporting by Dan
Wilchins; Editing by John Wallace and Richard Chang)