Citi’s credit-card customers will receive $335 million in refunds after the bank failed to lower their interest rates in accordance with the law. The refund…
Citi’s credit-card customers will receive $335 million in refunds after the bank failed to lower their interest rates in accordance with the law.
The refund — due to cardholders who once lapsed but then resumed making timely payments — will result in checks of about $190 apiece for 1.75 million customers who were wrongly penalized since 2011.
The bank said it uncovered the error during a semi-annual review of cardholders hit with increasing annual percentage rates for being delinquent or missing payments.
“While we believed our methodology was sound, a periodic internal review identified potential flaws,”said Liz Fogarty, Citi’s head of public affairs for global consumer banking.
The Credit Card Accountability Responsibility and Disclosure Act, which took effect in 2011, requires card issuers to reduce the APRs on previously lapsed cardholders who right their ways.
Each review covered about 70 million accounts and, collectively, they’ve delivered $3 billion to Citi customers. Fogarty estimated that was about 90 percent of the interest-rate savings due Citi customers.
However, on learning about the remaining 10 percent, Citi said in a regulatory filing on Friday that it informed its regulators, revised its methodology and set about “providing remediation.”
Fogarty told The Post the bank had found no evidence of misconduct but admitted it should have recognized the problem sooner.
Matt Schulz, a senior industry analyst at CreditCards.com, noted the refund was a rounding error for a bank that just reported its revenue for 2017 exceeded $70 billion.
“But for millions of Americans who live paycheck to paycheck, $190 matters,” he said. “They will certainly welcome it, especially since they shouldn’t have had to part with it in the first place.”
