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UPDATE 2-Citigroup settles with Cuomo over "free" checking
February 1, 2010 / 7:46 PM / 8 years ago

UPDATE 2-Citigroup settles with Cuomo over "free" checking

* 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 (Reuters) - 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 of dollars.

“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 agreement shows.

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 Stock Exchange.

Reporting by Jonathan Stempel; Additional reporting by Dan Wilchins; Editing by John Wallace and Richard Chang

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