One of the largest global banks, Citigroup (NYSE: C), will refund consumers $700 million and pay $70 million in fines for deceptive and illegal marketing.
Citigroup has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions operating for management reporting purposes, via two primary business segments: Citicorp, representing Citi's core growth franchises, and Citi Holdings. Citi provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, transaction services, and wealth management.
Approximately 7 million consumers were damaged by Citigroup's deceptive practices, including online enrollment, “point-of-sale” application and enrollment at retailers, billing and the administration of debt protection and credit monitoring services. Another 1.8 million consumers were charged expedited payment fees during telemarketing calls.
The New York based company falsely offered services such as allegedly telling consumers about 30-day free trials for limited products or selling fraud and identity theft protection assistance that never existed.
In the second quarter of 2015, Citi reported net income of $4.8 billion, or $1.51 per diluted share, on revenues of $19.5 billion. This compared to net income of $181 million, or $0.03 per diluted share, on revenues of $19.4 billion for the second quarter 2014.
“We continue to uncover illegal credit card add-on practices that are costing unknowing consumers millions of dollars,” said Consumer Financial Protection Bureau Director Richard Cordray. “In our four years, this is the tenth action we’ve taken against companies in this space for deceiving consumers. We will remain on the lookout for similar conduct and will address it as we find it.”