Citi will pay

July 21, 2015 11:57 AM

Citigroup Inc's consumer bank has been ordered to pay $700 million in relief to borrowers for illegal credit card practices, the U.S. Consumer Financial Protection Bureau said.

The consumer finance watchdog said on Tuesday that about 7 million customer accounts were affected by Citibank's "deceptive marketing" practices, which included 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 a Citibank unit also "deceptively" charged nearly 1.8 million consumer accounts often unnecessary same-day payment fees while collecting payments.

Citibank misrepresented the charge of $14.95 per account as a "processing" fee and did not explain that the fee was merely to make a faster payment, the CFPB said.

Citibank and its subsidiaries will also pay $35 million in civil penalties to the CFPB and $35 million to the Office of the Comptroller of the Currency.

"Citi is fully reserved for costs associated with the agreements," the bank said in a statement. Citi said it had cooperated with the regulators in the probe.

Citi is not the only big U.S. bank whose credit card practices are under scrutiny.

U.S. authorities, including the CFPB, said earlier this month that JPMorgan Chase & Co would pay $136 million and reform its credit card debt collection practices.

JPMorgan was accused of relying on robo-signing and other discredited methods of going after consumers for debts they may not have owed and for providing inaccurate information to debt buyers.

Citi shares were up 0.5 percent at $59.12 in noon trading on the New York Stock Exchange.

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