Citibank is paying $335 million to credit card customers that didn’t receive legally mandated interest rate reductions in a settlement announced Friday by the Consumer Financial Protection Bureau (CFPB).
The bureau alleged that Citibank violated the Truth in Lending Act by failing to reevaluate and adjust the annual percentage rates (APR) for 1.75 million credit card customers. Citibank also lacked appropriate policies to ensure the rate adjustments were conducted to follow federal regulations, the CFPB alleged.
{mosads}Citibank agreed to repay credit card customers the excess interest they paid, but the CFPB did not fine the bank beyond the ordered restitution. The bureau said it agreed not to issue further penalties because Citibank reported the violations to the CFPB and and sought to compensate customers well before the Friday settlement.
The CFPB said that Citibank found several errors and deficiencies in its APR adjustment procedures during a late 2016 internal review of its credit card products. The bank reported the issues to the CFPB in early 2017 when the bureau was led by then-Director Richard Cordray, a Democrat appointed under President Obama.
Citibank also agreed to report to the CFPB on the implementation of policies meant to ensure credit card customers received legally mandated interest rate adjustments.
The Citibank settlement is the third agreed to under acting CFPB Director Mick Mulvaney. It’s the second largest behind the bureau’s $1 billion settlement with Wells Fargo, issued jointly with the Office of the Comptroller of the Currency.