7 Ways Citi Squeezed Millions of Credit Card Holders, According to the CFPB

Consumers have gotten used to the pitches from their credit card companies: Sign up and get protection from identity theft and credit problems. They have often ended up saddled with high fees for services they didn’t understand. According to government regulators, many of the sales tactics were misleading. The Consumer Financial Protection Bureau, which turns four years old today, has taken action 10 times against what it calls “illegal credit card practices.”

The latest is a big one. Citigroup Inc. was ordered to pay $70 million in fines, and $700 million in relief to customers, for the way it ran its credit card business. Citi and its hired telemarketers used deception to steer customers into extra fees and services they didn’t need, the CFPB said in a statement today. 

Citi “has taken extensive steps to address each issue that affected customers,” the company said in a statement of its own. It discontinued sales of the add-on products criticized by the CFPB and started refunding customers back in 2013.

About 7 million Citi customers were affected by the illegal sales tactics, the CFPB estimates. The services generally cost $7 to $13 per month.

Here, according to the Bureau, are a few of the tactics Citi used.

1. ‘Free’ Didn’t Mean Free 

Citibank told telemarketers to entice customers with a “free 30-day trial period,” but the bank would sometimes charge during the first 30 days anyway, the CFPB says. Or customers were left with the impression that the “free” service would go away after 30 days if they did nothing. Instead, after a month, they started getting charged regular fees.

2. Taking yes for an answer

On the phone with customers, telemarketers would use leading questions to steer customers into signing up for certain products, the CFPB claims. Or they would construe “ambiguous responses” as permission to enroll customers in a service.

3. Fee for No Service