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CFPB Orders Citibank to Provide Relief to Consumers for Illegal Debt Sales and Collection Practices
Thursday, February 25, 2016 6:40 AM

Citibank Sold Credit Card Debt with Inflated Interest Rates; Debt Collectors for Citibank Altered Affidavits

The Consumer Financial Protection Bureau on Tuesday took two separate actions against Citibank for illegal debt sales and debt collection practices. In the first action, the CFPB ordered Citibank to provide nearly $5 million in consumer relief and pay a $3 million penalty for selling credit card debt with inflated interest rates and for failing to forward consumer payments promptly to debt buyers.

The second action is against Citibank and two debt collection law firms it used that falsified court documents filed in debt collection cases in New Jersey state courts. The CFPB ordered Citibank and the law firms to comply with a court order that Citibank refund $11 million to consumers and forgo collecting about $34 million from nearly 7,000 consumers.

"Citibank sent inaccurate information to buyers when it sold off credit card debt and it also used law firms that altered court documents," said CFPB Director Richard Cordray. "Today's action provides redress to consumers who were victimized by slipshod practices as part of our ongoing work to fight abuses in the debt collection market."

Citibank, N.A., is a national bank with headquarters in New York, N.Y., that issues consumer credit cards. From 2010 to 2013, Citibank sold portfolios of charged-off credit card accounts. It typically provided debt buyers with information about the consumer and the debt, including the supposed annual percentage rate (APR). A “charged-off” account is one the bank deems unlikely to be repaid, but may sell to a debt buyer, usually for a fraction of face value. The debt buyer then can try to collect on those accounts.

View more information on this announcement.