| Citizens Bank has agreed to pay federal consumer regulators $9 million to settle claims it didn’t protect credit card-holders during charge disputes and fraud claims.
The Consumer Financial Protection Bureau had filed suit against the Providence, Rhode Island-based bank in 2020 under the Truth in Lending Act’s Regulation Z.
In its suit, the CFPB claimed Citizens didn’t “reasonably investigate and resolve” billing errors and potential fraud incidents “by making customers jump through unnecessary and burdensome hoops” to report fraud. On top of that, the CFPB said, Citizens didn’t fully refund customers for finance charges or fees after billing errors and fraud incidents occurred, and didn’t acknowledge receipt of some customers’ billing error notices or alerts that it was denying the claim. Lastly, the regulator said Citizens didn’t disclose credit counseling information to callers to a toll-free number set up for that purpose, instead sending their calls to its collections department.
In a statement, Citizens said it had actually reported the problems to the CFPB after first identifying them in 2015. The issues impacted around 25,000 of its credit card customers, or around 2 percent of the total, the bank said.
“While Citizens continues to disagree with the CFPB’s stance with respect to these long-resolved issues, which were self-identified and voluntarily addressed years ago, we are pleased to put this matter behind us,” Citizens’ general counsel Polly Klane said. “We remain proud of our commitment to transparency, our rigorous compliance programs, and our consistent effort to treat customers fairly and operate responsibly.”
Under the terms of the settlement, which is awaiting approval from a judge, Citizens isn’t admitting to or denying any of the CFPB’s claims. However, it will have to pay a $9 million penalty to the CFPB’s victims relief fund and reform how its credit card services handles billing error notices and fraud claims. In its statement, Citizens said all work to reform its practices has already been completed and “exceeded all obligations to make customers whole.”
“Federal law provides important rights to credit cardholders when disputing transactions and resolving billing errors,” CFPB Director Rohit Chopra said in a statement. “As outstanding credit card debt approaches $1 trillion, the CFPB will be closely watching the conduct of the credit card industry.”
