Citibank customers to get refunds, debt forgiveness under settlements over allegedly illegal debt collections
Bank accused of breaking law when collecting debts
Citibank will refund millions of dollars to customers and stop trying to collect credit card debts from others following probes into the bank's debt collections.
The Consumer Financial Protection Bureau said Citibank broke the law by providing inaccurate and inflated interest rate information for about 130,000 credit card accounts it sold to debt buyers.
That resulted in the debt collectors using the exaggerated interest rates when collecting debts.
The bank also was accused of failing to promptly forward about 14,000 payments from customers, totaling about $1 million, to the debt buyers.
Citibank settled the case and did not admit or deny the accusations.
The settlement, announced Tuesday, calls for Citibank to refund about $4.9 million to about 2,100 customers whose payments to debt buyers were calculated using the incorrect interest rates.
The Consumer Financial Protection Bureau brought a second case against Citibank; Citibank affiliates Department Stores National Bank and CitiFinancial Servicing; and debt collection law firms Faloni & Associates and Solomon & Solomon.
The agency alleged the law firms alterated information, including dates and amounts owed, on bank affidavits used in debt collection cases in New Jersey courts.
In that case, Citibank already has refunded $11 million collected from customers and stopped collecting on another $34 million in debts. Solomon & Solomon was fined $65,000 and Faloni & Associates was fined $15,000, according to a news release.
In the settlements, the law firms did not admit or deny the allegations.
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