PROVIDENCE – The Consumer Finance Protection Bureau on Thursday filed a lawsuit in the U.S. District Court of Rhode Island against Citizens Bank N.A., alleging that the bank violated the Truth in Lending Act for several years.
CPFB claims that the bank failed to properly manage and respond to credit card disputes from 2010 to 2015. The allegations include assertions that the bank automatically denied consumers’ billing error notices. The complaint also alleged that the bank did not fully refund finance charges and fees when consumers asserted “meritorious disputes” and failed to send consumers required acknowledgement and denial letters related to billing error notices.
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CFPB also claims that the bank did not provide required credit counseling referrals to consumers who called the bank’s toll-free number designated for that purpose – sometimes routing customers not in good standings to collections instead of customer service.
Citizens Financial Group Inc.., the parent of Citizens Bank, on Thursday challenged CFPB’s lawsuit, claiming that the company self-reported the operational errors “nearly five years ago” and had already taken the necessary remediation for affected consumers.
Citizens said that the errors impacted 25,000 of its 1.2 million credit card customers and that it had already paid $750,000 in remediation to a “broader set of customers than required by law.”
The company also asserted that the problems CFPB is trying to address are past the expiration of a one-year statute of limitations. The bank also claimed that it had not received a customer complaint about the infractions prior to or after its self-directed remediation.
“We are puzzled and disappointed by CFPB’s stance with respect to these long-resolved issues. Citizens fully addressed these matters within months of self-identifying, self-reporting and voluntarily remediating them more than four years ago,” Citizens General Counsel Stephen T. Gannon said in a statement. “CFPB’s demands are wholly disproportionate to the issues at hand, and we strongly believe that the bureau’s claims are unwarranted on both the facts and the law. We intend to vigorously contest CFPB’s claims.”
The lawsuit seeks monetary relief for impacted consumers, disgorgement of “ill-gotten gains” by Citizens, civil money penalties, payment covering the lawsuit and any other damages as determined by the court.
“We are proud of our commitment to transparency, our vigorous compliance programs and our consistent effort to treat customers fairly and be a responsible company,” Gannon added. “We have received positive assessments of this program from all who have examined it, including the CFPB.”
Chris Bergenheim is the PBN web editor. You may reach him at Bergeheim@PBN.com.
