(Reuters) - Citigroup Inc’s consumer bank has been ordered to pay $700 million in relief to borrowers for illegal credit card practices, the U.S. Consumer Financial Protection Bureau said.
The CFPB, set up under the 2010 Dodd-Frank Act aimed at reforming Wall Street, has been cracking down in recent years on credit card companies offering payment protection, credit score tracking and other add-on products.
Citi will also pay civil penalties of $35 million each to the consumer finance watchdog and the Office of the Comptroller of the Currency.
The settlement is the CFPB’s tenth such case, Director Richard Cordray said in a statement on Tuesday.
“They (the CFPB) are just marching through the industry,” FBR & Co financial policy analyst Edward Mills told Reuters.
“The CFPB loves to have big numbers like this, especially when the largest percentage of the fine goes back to customers because there’s a lot of (political) push-back about the cost of the CFPB and the way they’re funded.”
Other major U.S. banks under that have been fined over credit card misconduct include JPMorgan Chase & Co and Bank of America Corp.
Tuesday’s settlement is about 1 percent of the bank’s estimated revenue for 2015, according to Thomson Reuters StarMine.
“Citi is fully reserved to pay costs associated with the agreements,” the bank said in a statement.
As of May 21, Citi had paid out over $17 billion in fines and settlements since the financial crisis.
The CFPB said that about 7 million customer accounts were affected by Citibank’s “deceptive marketing” practices, which included misrepresenting costs and fees and charging customers for services they did not receive.
A Citibank unit also “deceptively” charged nearly 1.8 million consumer accounts often unnecessary same-day payment fees while collecting payments, the CFPB said.
Citi said it had been issuing refunds and had stopped selling products that were part of its agreements with the regulators, including credit monitoring and debt protection products.
Capital One Financial Corp, American Express Co and Discover Financial Services are among other card issuers that have been fined by the CFPB since 2012.
Citi shares were up 0.5 percent at $59.13 in late afternoon trading on the New York Stock Exchange.
Additional reporting by Elvina Nawaguna in Washington; Editing by Emily Stephenson and Kirti Pandey
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