Citi to Refund $335 Million in Card Charges Due to Interest-Rate Problem
February 23 2018 - 12:09PM
Dow Jones News
By AnnaMaria Andriotis
Citigroup Inc., one of the largest U.S. credit-card issuers,
said Friday that it failed to lower interest rates for some
credit-card customers as required by federal law.
The bank said it plans to issue around $335 million in refunds
to affected customers, or about $190 on average per affected
account.
Citi said the issue stemmed from the bank increasing annual
percentage rates on cards after customers missed payments as well
as other reasons. Federal law, including a provision in the Credit
Card Accountability Responsibility and Disclosure Act that was
passed in 2009, requires card issuers that increase rates to review
those accounts every six months.
Issuers are then supposed to reduce the rate if the reason for
the increase is no longer a problem. That could include, for
example, a cardholder establishing a pattern of again paying their
bill on time.
Citi said the issue affected 1.75 million U.S. credit-card
accounts over a period ranging from 2011 to 2017. Some of those
accounts received smaller rate reductions than they should have,
while others didn't receive any reduction, the bank said.
The bank currently has around 120 million U.S. credit-card
accounts and had a total of about 250 million U.S. credit-card
accounts during the period in which the problems occurred. Citi is
the third-largest U.S. credit-card issuer by total volume and by
outstanding balances, according to the Nilson Report.
The bank, which disclosed the issue in its annual securities
filing made Friday, said a periodic internal review identified the
flaws in its methodology. Citi reported the issue to its
regulators, including the Consumer Financial Protection Bureau.
Citi hasn't yet identified all the consumers affected and said
they include current and former cardholders.
--Christina Rexrode contributed to this article.
Write to AnnaMaria Andriotis at annamaria.andriotis@wsj.com
(END) Dow Jones Newswires
February 23, 2018 11:54 ET (16:54 GMT)
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