On May 23, 2023, the CFPB reached a settlement to resolve allegations that Citizens Bank violated consumer financial protection laws and rules that protect individuals when they dispute credit card transactions. According to the CFPB, Citizens Bank failed to manage and respond to credit card disputes and fraud claims properly. The order would, among other things, impose a $9 million civil money penalty on Citizens Bank.
Citizens Bank is one of the largest consumer banks in the country with several branches across the states and is a subsidiary of Citizens Financial Group. The CFPB originally sued Citizens Bank in January 2020 where the CFPB alleges that Citizens Bank violated the Truth in Lending Act and its implementing Regulation Z by:
Improperly denying customer reports of fraud and errors and failing to provide refunds. The bank failed to investigate and resolve billing error notices and claims of unauthorized use in a reasonable manner by putting customers through unnecessary and burdensome processes, which are not required TILA. The bank also at times failed to refund charges and fees when unauthorized use and billing errors occurred.
Failing to provide required documents and referrals. In some cases, the bank did not provide customers who submitted billing error notices with the required acknowledgement or denial notices. In addition, the bank routed some individuals who called the bank’s toll-free number designated for credit counseling to the bank’s collections department.
If entered by the court, the stipulated judgment and order would require Citizens Bank to fix its credit card practices and pay a $9 million penalty to the CFPB’s victims relief fund.
Read the CFPB’s press release here.
The Proposed Stipulated Final Judgment and Order can be found here.