Citizens fined $35M for under-crediting depositors

THREE FEDERAL REGULATORY AGENCIES - the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corp. and the Office of the Comptroller of Currency - have fined Citizens Financial Group for failing to fully credit depositors between 2011 and 2013.
THREE FEDERAL REGULATORY AGENCIES - the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corp. and the Office of the Comptroller of Currency - have fined Citizens Financial Group for failing to fully credit depositors between 2011 and 2013.

PROVIDENCE – Three federal regulators on Wednesday ordered Citizens Financial Group Inc. and its subsidiaries to pay at least $34.5 million in federal fines, a civil penalty and restitution for failing to credit some consumers with the full amount of their deposits.

The Consumer Financial Protection Bureau, the Federal Deposit Insurance Corp. and the Office of the Comptroller of Currency took the action against Providence-based Citizens Financial, with $137.7 billion in assets, and its subsidiaries Citizens Bank NA and Citizens Bank of Pennsylvania.

Citizens, in a statement, said past practices and disclosures “could have been better,” but that the company has since implemented a new teller system, completely installed in the fourth quarter of 2013, that now automates the process.

“As we continue to improve our performance as a company, we are pleased to have resolved this matter from an earlier era,” the company said in a statement. “We strive to do our best for our customers every day and to do right by consumers when issues like this come to light. We are working with our regulators to make appropriate redress as quickly as possible.”

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The CFPB detailed its investigation into company practices between 2011 and 2013 when it said Citizens Bank often kept “millions of dollars” from deposit discrepancies when receipts didn’t match actual money transferred.

“Citizens Bank regularly denied customers the full credits of their deposits when there were discrepancies between deposit slips and actual money transferred into the bank,” said CFPB Director Richard Cordray in a statement. “The bank chose to ignore these discrepancies and harmed many consumers by pocketing the difference.”

CFPB said Citizens often didn’t give consumers their full credit from deposits if it was less than the amount of the checks and cash deposited, but acknowledged that some consumers also benefited from this practice when the amount credited exceeded the amount deposited.

Citizens says “the over- and under-credits to consumers were approximately equal,” during that period. The company also notes that over-credited customers would keep the excess funds, while the under-credited customers will be reimbursed.

CFPB says Citizens Bank, between January 2008 and September 2012, only investigated and corrected erroneous deposits greater than $50. Between September 2012 and November 2013, Citizens Bank lowered that amount to deposits greater than $25, according to the release.

The CFPB ordered Citizens Bank pay $11 million to redress the negatively affected consumers along with any fees the consumer might have incurred, such as overdraft fees, insufficient fund fees and monthly maintenance fees. The agency further ordered Citizens to pay a $7.5 million penalty fee to CFPB’s Civil Penalty Fund.

The FDIC is separately ordering Citizens Bank of Pennsylvania to pay a $3 million civic penalty and a $3 million refund to business account holders. The FDIC said violations by Citizens Bank of Pennsylvania affected consumers and businesses who held more than 475,000 accounts. The OCC separately ordered Citizens Bank NA pay an additional $10 million civil penalty.

Citizens said in a statement that it has “adequate reserves to cover the redress and fines.”

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