By Adam Deutsch and Joshua W. Denbeaux as published in The Hill March 1, 2016
On Feb. 23, 2016 the Consumer Financial Protection Bureau announced the latest settlement with one of America’s darling giants of the banking industry. The Feb. 23 settlement with the CFPB is one of many ongoing systematic frauds relating to the loan servicing practices of Citibank and the credit card industry as a whole. This time the perpetrator of organized financial fraud is the nation’s third largest bank, Citibank, N.A. and the mark was YOU.
Based on the language of the consent order which details Citibank’s wrongful behavior, the bank got off with a handshake and a brotherly pat on the back. A settlement payment of $53 million is a lot of money to you and me, but it is a meaningless rounding error to Citibank’s bottom line. This type of penalty is not meaningful because it is certainly less than Citibank earned through its fraudulent behavior.
According to the consent agreement, Citibank intentionally manipulated credit card accounts before selling the debt to third party debt collection companies. The manipulations included inflation of the APR for 128,809 accounts. In some instances the APR was overstated by 29 percent.
Then Citibank sold the loans and the borrowers’ names, addresses, social security numbers and other sensitive information to debt collectors AND after selling the credit accounts to third party collectors, to the debt buyers, Citibank continued to collect payments from the debtors and kept the funds for itself despite not owning the debt. Those payments were not credited to the already falsely inflated credit card accounts and so many borrowers were told to pay twice on illegally inflated credit card bills.
That means that the affected consumers – YOU AND ME – were subjected to multiple collection attempts from different entities for the same debt. Where consumers made payments to Citibank that were not credited to their accounts, the consumers were subject to unwarranted negative credit reporting by the debt collectors to the credit reporting agencies and were pursued for debt that they had already paid. This surely impacted people’s ability to buy a car, a home or to co-sign for college loans funding the education of the next generation.
Admitting that it violated federal law, Citibank also acknowledged that it had no policy in place to notify the debtors that collection rights on their credit card account had been transferred to a different company.
Why would it? Way waste the money to make sure that Citibank does not steal from its customers when stealing makes money?
You need to pay attention to this story. This story is not about CitiBank, or if it is about Citibank, it is only about Citibank because they happened to get caught. This story is about you, your siblings, your parents, your children. It is about anyone who has a credit card.
Consumers are often intimidated to fight with a behemoth like Citibank, and give up after losing the war of attrition waiting for assistance on the customer service phone line. Do not despair. The laws are already in place for consumers to force Citibank to pay the individuals and families whose lives it has harmed through acts of fraud.
To stop the unsolicited victimization of the public consumer, we must start to exercise our rights provided by Congress through consumer protection laws including the Fair Debt Collection Practices Act, Truth in Lending Act, and Fair Credit Reporting Act. These statutes and others provide consumers with protective rights to fight wrongful conduct including the acts perpetrated by Citibank. When successful, the wrongdoer will not only pay you for the wrong done, they will also pay your court fees and attorney fees. These laws were put into place to encourage YOU AND ME to be public prosecutors of the financial industry.
This not only means that you as a harmed consumer can access free quality legal representation but it also means that you can help make a difference to this fraudulent financial scheme affected thousands and thousands of people.
If each of the consumers injured by the conduct of Citibank filed a separate lawsuit it would have a far greater impact on future conduct of Citibank than the $53 million settlement with the CFPB. Citibank and its peers assume that they will get away with illegal conduct, because for years they have. We, the consumer must stop letting the government do the fighting for our rights alone, a call to arms is necessary if future financial crises are to be averted.
Citibank has assets valuing $1.77 trillion and deposits of $883 billion. If Citibank has treated you unfairly, some of that money rightfully belongs to you.
Deutsch is a senior associate attorney at Denbeaux & Denbeaux in Westwood, NJ, currently concentrating his practice on consumer rights litigation. Denbeaux is a partner at Denbeaux & Denbeaux concentrating his practice on financial consumer rights issues.