Citi-Scam: “Protecting” Consumers

Part One: Did you get Citi’s refund letter?

Organized Crime had better watch out: Citi is in the old protection racket. The Consumer Financial Protection Bureau caught Citi in a deceptive marketing scam that added a Credit Protection “service” for Macy’s and Bloomingdale’s credit cards without cardholder prior knowledge or consent.

The Cosa Nostra invented the protection racket in the 19th Century. Citi was in it from 2009 to 2014 until caught by the Consumer Financial Protection Bureau. The CFPB ordered Citi to pay $35 million as a wrongdoing fine and set up a system to refund $700 million to Macy’s and Bloomingdale’s cardholders.

Finally, on August 3, 2017, Citi snail-mailed a two-paragraph refund letter to affected consumers. The letter says its records “reflect that you previously enrolled in Credit Protection…for which you were charged a monthly fee.“ It directs consumers to a website for “submitting a claim that does not guarantee a refund.” Citi’s letter doesn’t mention the $35 million fine or how customers were wrongfully signed up—or apologize. Citi’s remorse is limited to being caught. And like Citi, Bloomingdale’s and Macy’s dodge and weave when asked about this scam.

If you wish to discover how much you are scheduled to get back, try a fortuneteller. For now, Citi, Bloomingdale’s and Macy’s are getting away with evasion of key questions: Although they have your payment records, why will they not say how much you paid for the protection? Why should consumers trust these three co-conspirators to fully return what they illegally took?

Citi, Bloomingdale’s and Macy’s are trying to reduce the projected $700 million payback. Their tactics are to stonewall about the August 3 refund letter, direct questions back to the refund site, send consumers to toll-free numbers answered by operators hearing about the refund for the first time.


Maybe Citi thought it could do it better than Wells Fargo (WF). Last October WF managers collected bonuses for meeting income forecasts by signing up existing customers for services in a similar scam. John Stumpf, then WF’s CEO, claimed ignorance of the racket and fired about 5,000 employees—and paid the top exec in charge several hundred thousand in severance. Earlier this year, Tim Sloan, Stumpf’’s successor, was surprised to learn about a million customers were still being victimized by WF.

So what’s going on with Citi’s top management? Abuse of consumers is low risk for Citi. But muscling in on a Cosa Nostra enterprise is high risk. Citi management needs to watch reruns of The Godfather.

Regular Readers: This is the first of three posts on this Citi scam. The second will examine pitfalls of the Citi refund site. The third will suggest actions to protect consumers from scams like Citi’s. If you think this might be helpful to friends, please forward. The back-stories of this scam need more exposure

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