The banking giant has been ordered by US authorities to pay $700 million in relief to consumers affected by the bank's deceptive practices related to deceptive credit card add-on products and services.
The Consumer Financial Protection Bureau (CFPB), a US government agency, said Tuesday that Citi had indulged in deceptive marketing practices including misrepresenting costs and fees and charging customers for services they did not receive.
The CFPB, set up under the 2010 Dodd-Frank Act aimed at reforming Wall Street practices, said Citi will have to issue refunds to 8.8 million affected consumers who paid for credit card add-on products and services, such as credit score monitoring or "rush" payment processing.
Citi representatives told consumers there were 30-day "free" trials for some products, when in fact no such trials existed, or sold fraud and identity theft protection when the bank wasn't performing such services at all.
"We continue to uncover illegal credit card add-on practices that are costing unknowing consumers millions of dollars," said CFPB Director Richard Cordray.
"In our four years, this is the tenth action we've taken against companies in this space for deceiving consumers. We will remain on the lookout for similar conduct and will address it as we find it," he added.
In a statement, Citi said it stopped illegal practices in 2013 and is in the process of issuing refunds or credit card statement credits to the affected customers.
Citigroup is not the only big US bank whose credit card practices are under scrutiny. Earlier this month, JPMorgan Chase & Co. was also ordered by authorities to pay around $136 million and reform its credit card debt collection practices.
sri/cjc (AP, Reuters, CFPB)