Citizens Bank to Pay $9 Million Penalty in Settlement with CFPB

Citizens Bank (CFG) will pay a $9 million penalty to the Consumer Financial Protection Bureau (CFPB) to settle allegations of unlawful credit card servicing practices, including failure to properly manage and respond to customers’ credit card disputes and inquiries.

Providence, RI-based bank, which reported $222 billion in assets at the end of the first quarter, is one of the nation’s 15 largest consumer banks, with branches and ATMs in 14 states and the District of Columbia.

The CFPB originally sued Citizens Bank in January 2020 for allegedly violating the Truth in Lending Act (TILA) and Regulation Z by failing to properly manage and respond to customers’ credit card inquiries. The bureau alleged that Citizens Bank systematically denied notices of billing errors, failed to fully refund finance charges and fees, and failed to send customers acknowledgment letters when rectifying billing errors.

The CFPB also alleged the lender violated the Credit Card Accountability Responsibility and Disclosure (CARD) Act, by failing to provide counseling referrals to customers who called the bank’s toll-free number.

Under the Consumer Financial Protection Act, the CFPB has the authority to take legal action against banks and financial institutions that violate consumer protection laws. The CFPB’s settlement would require Citizens Bank to fix its credit card practices, including the treatment, handling, and resolution of billing error notices, to comply with the law.

The bank is required to refund any fees in response to valid billing error notices and unauthorized use claims, and bank employees are prohibited from forcing customers to provide fraud affidavits, under penalty of perjury, in support of credit card claims. Lastly, the lender will have to pay a $9 million penalty to the CFPB’s Victims Relief Fund.

"Federal law provides important rights to credit cardholders when disputing transactions and resolving billing errors,” said CFPB Director Rohit Chopra. “As outstanding credit card debt approaches $1 trillion, the CFPB will be closely watching the conduct of the credit card industry."