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From Banking and Finance Law Daily, March 19, 2018

Senators question CFPB on Citigroup CARD Act failure

By Colleen M. Svelnis, J.D.

A group of Senators, including Senate Banking Committee members Sherrod Brown (D-Ohio), Catherine Cortez Masto (D-Nev), and Elizabeth Warren (D-Mass), have sent a letter to the Consumer Financial Protection Bureau expressing concerns about Citigroup’s failure to comply with the Credit Card Accountability and Responsibility and Disclosure (CARD) Act of 2009. The letter was sent to CFPB Acting Director Mick Mulvaney and Deputy Director Leandra English, and asked whether the Bureau "will be taking additional actions to ensure borrowers will not be harmed by similar practices at Citigroup" or other credit card providers. The letter was also signed by Sens. Jack Reed (D-RI), Kristen Gillibrand (D-NY), Richard Blumenthal (D-Conn) and Jeffery A. Merkley (D-Ore).

The CFPB is responsible for enforcement of the CARD Act. According to the letter, "In a recently published strategic report, the CFPB stated it would fulfill the Bureau’s statutory responsibilities but go no further… we would like to know whether the CFPB will be taking additional actions to ensure borrowers will not be harmed by similar practices at Citigroup or other credit card providers."

According to the Senators, Citigroup recently reported that it failed to comply with the CARD Act of 2009 and did not properly reduce interest charges on more than 1.75 million credit card accounts since 2011. Citigroup plans to refund $355 million to customer accounts after it incorrectly adjusted interest rates for cardholders who resumed timely payments after having had to pay penalty rates for lapses.

The letter asked for responses to the following questions by April 6, 2018.

  1. How does the CFPB plan to investigate Citigroup’s self-assessment and response to consumers? Will the CFPB investigate compliance failures at Citigroup that allowed this practice to continue for five years? Will the Bureau seek additional penalties? Does the Bureau plan to make this a supervisory priority at other credit card banks?
  2. Were overcharges concentrated among customers who paid online or who received a paper statement? Is the CFPB evaluating whether those who pay online receive adequate disclosures?
  3. What fines were assessed against firms for violations of the CARD Act in the past five years? Does the Bureau plan on continuing to use its authority to enforce against unfair, deceptive, and abusive acts and practices in credit card markets?

Companies: Citigroup

MainStory: TopStory CFPB ConsumerCredit CreditDebitGiftCards

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