Citi-Scam Post Finally Updated


Part Two: Citibank and co-conspirators pay up

My October 19th blog post promised two additional posts about Citibank’s handling of a $700 million refund to consumers. The delay was a combination of procrastination and discovery of how the Consumer Financial Protection Bureau (CFPB) now works.

Quick review: Ten years ago Citibank concocted a Protection Plan add-on to credit cards it issued for Macy’s and Bloomingdales. Consumers were tricked into ordering a phony “protection” feature when signing up for the card or simply without without their knowledge. Either way a monthly charge for “protection” went on as long as the card was used—unless consumers discovered the scam.

The Consumer Financial Protection Bureau, during the Obama Administration, fined Citibank about $70 million and ordered Citi to refund $700,000 million to consumers. At the start of the Trump Administration, Trump said he wanted to get rid of the CFPB. The financial services industry loved that idea because the CFPB was set up in the Great Recession to protect consumers from tricky banking schemes and hounded banks about consumer harm. (Senator Elizabeth Warren originated the idea for what resulted in the CFPB before she was a senator.)

As I researched implementation of the refund, barriers blocked attempts to learn more about issues such as how refunds were determined and how refunds were processed. Citibank, Bloomingdales and Macy’s refused to disclose any information about the refunds beyond go to the website. The three co-conspirators used nearly identical language when anyone could be reached. Coincidence? Advice from counsel?

The Trump Administration has yet to end the CFPB. But its resources have been reduced and its mission changed to Do no harm to corporations by doing little good for consumers. Operationally the CFPB “oversight” of the $700 million refund was delegated to Citibank and its two co-conspirators.

The CFPB is under the new management of Mick Mulvaney. He is evolving CFPB from tiger to pussycat. The CFPB stonewalled questions about the refund process. Promises of return calls from officials never happened.

My refund check came on January 18 for $7.58 for “certain customers who enrolled in Credit Protection between 1 January 2003 and 31 December 2012.” Citibank, Macy’s and Bloomingdales offered a phony protection scheme for 10 years.

Their message is clear: Be happy in your refund.

 

 

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