Sweep feature removed money from credit card accounts…
A three-year investigation by California Attorney General Jerry Brown of CitiGroup, Inc. has resulted in an agreement to pay nearly $18 million in settlement charges and refunds for taking funds from the accounts of credit card customers. Citigroup, the largest U.S. bank based in New York, will pay restitution of more than $14 million to roughly 53,000 people nationwide and 10% interest to affected California customers who accounted for $1.6 million of the money “swept” out of accounts and into a Citi fund. For example, if a customer double-paid by mistake or refunded a purchase for credit, the positive balance was taken from the customer without notification. The accounts in question were in recovery status and included customers who had died, those seeking bankruptcy or those targeted for collection or litigation.
The investigation found that from 1992 to 2003 Citigroup used an improper computerized sweep feature that automatically moved positive balances from credit card accounts to the bank’s general fund without informing cardholders. A Citibank employee notified superiors of the practice in July 2001 with Citigroup stopping the practice in 2003.
“The company knowingly stole from its customers, mostly poor people and the recently deceased, when it designed and implemented the sweeps,” Attorney General Brown said in a statement. “When a whistleblower uncovered the scam and brought it to his superiors, they buried the information and continued the illegal practice.” Citigroup will also pay the state of California $3.5 million in damages and civil penalties.
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