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Citibank ordered to pay $3M CMP and $5M in relief

New York, NY
02/23/2016
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The Consumer Financial Protection Bureau announced today that it has taken "two separate actions against Citibank for illegal debt sales and debt collection practices. In the first action, the CFPB ordered Citibank to provide nearly $5 million in consumer relief and pay a $3 million penalty for selling credit card debt with inflated interest rates and for failing to forward consumer payments promptly to debt buyers. The second action is against both Citibank and two debt collection law firms it used that falsified court documents filed in debt collection cases in New Jersey state courts. The CFPB ordered Citibank and the law firms to comply with a court order that Citibank refund $11 million to consumers and forgo collecting about $34 million from nearly 7,000 consumers."

According to the Bureau's release, "from February 2010 until June 2013, it provided inaccurate and inflated APR information for almost 130,000 credit card accounts it sold to debt buyers. These buyers then used the exaggerated APR in debt collection attempts. Citibank also failed to promptly forward to debt buyers approximately 14,000 customer payments totaling almost $1 million. The CFPB found that Citibank violated [the UDAAP provisions of] the Dodd-Frank Wall Street Reform and Consumer Financial Protection Act."

The order on debt sales requires that Citibank:

  • Refund an estimated $4.89 million to roughly 2,100 consumers
  • Accurately document the debt it sells
  • Stop selling debt it cannot verify
  • Include certain protections in debt sales contracts preventing a debt buyer from reselling the debt
  • Provide consumers with basic information about the debt, such as the name of the original creditor, the credit agreement, and recent account statements
  • Pay $3 million in civil money penalties.

The CFPB took separate action against Citibank, two of its affiliates, and two debt collection law firms for altering affidavits filed in debt collection lawsuits. According to the Bureau's press release, Citibank retained Faloni & Associates, LLC, of Fairfield, N.J., and Solomon & Solomon, P.C., of Albany, N.Y. to collect credit card debt on its behalf in New Jersey state courts.Citibank filed sworn statements attesting to the accuracy of the debt allegedly owed. Citibank then provided the affidavits to their attorneys to file with New Jersey courts. The two firms retained by Citibank altered the dates of the affidavits, the amount of the debt allegedly owed, or both, after the affidavits were executed. This violated the Fair Debt Collection Practices Act. Solomon & Solomon, P.C., must pay a $65,000 penalty to the Bureau’s Civil Penalty Fund. Faloni & Associates, LLC, must pay $15,000. Consistent with the Bureau’s Responsible Business Conduct bulletin, the CFPB did not impose civil money penalties on Citibank for this violation, especially in light of its efforts to recompense harmed consumers.

  • Order against Citibank, N.A., Department Stores National Bank, and CitiFinancial Servicing, LLC, related to altered affidavits
  • Order against Faloni & Associates related to altered affidavits
  • Order against Solomon & Solomon related to altered affidavits

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