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Citibank to pay $770 million in fines and restitution

Citibank credit card customers who live in South Carolina might be happy to hear that they could be eligible for some compensation following an agreement between the company and the Consumer Financial Protection Bureau over the financial institution's illegal credit card practices. The agency revealed that the financial services firm will pay $70 million in penalty fines and $700 million to consumers.

According to the CFPB, Citibank was charging customers for what were supposed to be 30-day free memberships and for add-on services such as credit monitoring and debt protection that the firm never gave them. The agency reports that about 8.8 million people fell victim to these deceptive billing and marketing credit card services and add-on products. These practices account for millions in charges to unknowing customers.

In a statement regarding the agreement to pay the sums, Citibank said that it discontinued the sale of the services that were involved, including debt-protection and credit-monitoring products. It has set money aside for the settlement, and the customers who were affected will receive an automatic credit to their credit card statements or a check. Citibank also noted that consumers who no longer have credit cards with the company will receive a check in the mail if they are eligible.

This is not the first time that the CFPB has taken action against a financial services firm for illegal credit card practices since it was established under the Dodd-Frank Wall Street Reform and Consumer Protection Act. In early July, it settled an action against JPMorgan Chase for illegal debt collection practices.

While illegal practices are not generally the cause for credit card debt that overwhelms some individuals, it does not help these consumers. People who have credit card debt problems might be able to eliminate or resolve their issues with the help of bankruptcy attorneys.

Source: Forbes, "Citi To Pay $700 Million To Consumers Over Illegal Credit Card Practices," Lauren Gensler, July 21, 2015

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