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Citigroup to Refund $335M to Credit Card Customers it Overcharged

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If a credit card company paid back the consumers, they would be a smash hit. Well, sort of, because that doesn’t assume the payback referenced is actually money that was wrongfully taken and now being more or less forcibly given back.

Citigroup said last Friday it plans to refund $335 million to a group of customers who may have been overpaying interest on their credit cards, The New York Post reports.

Citi will refund 1.75 million customers the overpaid interest by the end of the year. The agreement came following a settlement with the Consumer Financial Protection Bureau.

Earlier this year, Citi disclosed that it had used a flawed methodology in determining whether credit card customers were eligible for an interest-rate reduction on their cards, as required by the CARD Act, a federal law that governs the credit card industry, according to The New York Post.

Citi disclosed the flaw to regulators, including the CFPB, in 2017, The Post continues. The CFPB didn’t fine Citi for the flawed practice because of the bank’s decision to self-report the problem to regulators and that it was in the process of refunding customers. Citi did already have funds ready to cover the refund in a regulatory filing earlier this year.

This is the third enforcement action that the CFPB has taken under Mick Mulvaney, President Trump’s budget director and current acting director of the bureau. The bureau has slowed its enforcement work under Mulvaney compared with Richard Cordray, President Barack Obama’s CFPB director who left the bureau last year, The New York Post reports.

The first came against Wells Fargo, which the bureau hit with a combined $1 billion in fines for poor mortgage and auto lending practices, and the second was against a debt collector called Security Group.

Last Friday’s settlement with Citigroup is the first time the CFPB has recovered money for consumers under Mulvaney, according to The New York Post.

The Consumer Financial Protection Bureau regulates the offering and provision of consumer financial products or services under the federal consumer financial laws and educates and empowers consumers to make better informed financial decisions.

The Consumer Financial Protection Bureau regulates the offering and provision of consumer financial products or services under the federal consumer financial laws and educates and empowers consumers to make better informed financial decisions.

When violators of consumer financial protection law pay a penalty to the bureau, those funds are deposited into the Civil Penalty Fund.

Payments to harmed consumers can be made when the bureau or court orders a company that has violated a consumer financial protection law to pay an amount of money to compensate the consumers’ harm. This money is distributed to victims either by the bureau, directly by the violator, or through a third-party administrator.

By: Akila Nunez

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