Consumer bureau sues Citizens Bank over alleged failure to resolve credit card errors

The Consumer Financial Protection Bureau (CFPB) on Thursday filed a lawsuit against Citizens Bank, alleging it routinely failed to investigate and resolve billing errors and unauthorized credit card charges reported by customers.

In a complaint filed in the U.S. District Court for Rhode Island, the CFPB accused Citizens Bank of violating a slew of federal consumer protection laws between 2010 and 2016.

The bureau claims Citizens Bank automatically rejected certain claims without due process, failed to compensate customers who were charged fees on erroneous or unauthorized transactions, and neglected to update some customers on the status of their complaints.

The CFPB also accused Citizens Bank of failing to offer credit counseling referrals to customers who called a designated phone line for that purpose. Instead, the bureau alleges, the phone number directed customers in good standing to the general customer service line, while customers with delinquent accounts were directed to the collections department.

Citizens Bank called the CFPB’s actions “misguided,” asserting that the bank fully compensated the “very small” number of affected customers soon after the bank reported these issues to the bureau in 2015.

“Citizens will vigorously challenge the CFPB’s action, which is legally unwarranted and includes demands far out of line with actual customer impact,” the bank said in a Thursday statement.

Citizens Bank said that it “self-identified operational errors” that affected roughly 2 percent, or 25,000, of its roughly 1.2 million credit card customers. The bank said it reported that conduct to the CFPB and paid $750,000 to a broad subset of potentially affected customers, calling the CFPB’s demands “far out of line.”

“The CFPB’s filing against Citizens, nearly five years later, ignores the swift, corrective actions that Citizens took,” the bank said.

The CFPB asked the court to force Citizens Bank to pay an unspecified fine, along with restitution and damages to customers affected by the alleged violations.