What a week in credit cards. First, the U.S. Supreme Court decides in Amex’s favor, then Mastercard and Visa announce a multi-billion settlement, and today, Citi announces that it plans to refund $335 million in fees for overcharging interest. This issue had been previously mentioned in Citi’s most recent 10K filing with the SEC. More detail can be found here.
Who says payments are not exciting?
In a settlement with the Consumer Financial Protection Bureau, Citi will refund 1.75 million customers in overpaid interest by the end of the year.
Citigroup said Friday it plans to refund $335 million to a group of customers who may have been overpaying interest on their credit cards.
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.
For those that thought the CFPB was dead, it may have slowed down and regrouped, but they are not asleep at the wheel.
This is the third enforcement action that the CFPB has taken under Mick Mulvaney, President Donald Trump’s budget director and current acting director of the bureau. The bureau has slowed its enforcement work under Mulvaney compared to Richard Cordray, President Barack Obama’s CFPB director who left the bureau last year.
The first was against Wells Fargo, which was fined a combined $1 billion fine for poor mortgage and auto lending practices, and the second was against a debt collector called Security Group.
Second quarter ends today. Maybe things will slow down a bit in July!
Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group