CFPB Action For Unlawful Credit Card Servicing
On May 23 , 2023 , the Consumer Financial Protection Bureau ( CFPB ) reached a settlement with Citizens Bank of Providence Rhode Island ( Citizens Bank ), a subsidiary of Citizens Financial Group . Citizens Bank is one of the largest U . S . regional banks , with branches in 14 states and the District of Columbia . Citizens Financial Group reported $ 222 billion in assets as of March 31 , 2023 .
The CFPB alleged Citizens Bank failed to properly manage and respond to consumers ’ credit card disputes and fraud claims . The regulator accused Citizens Bank of violating the Truth in Lending Act ( TILA ) by making customers “ jump through unnecessary and burdensome hoops ” to resolve billing errors and claims of unauthorized card use . If entered by the court , the order would require Citizens Bank to pay a $ 9 million civil money penalty to the CFPB ’ s Victim Relief Fund and fix its credit card practices . The fund is designed to compensate eligible harmed consumers , as well as provide funding for consumer education and financial literacy programs .
In addition to the civil money penalty , the bank is required to refund any fees in response to valid billing error notices and unauthorized use claims . Bank employees are prohibited from forcing customers to provide fraud affidavits , under penalty of perjury , in support of credit card claims .
“ Federal law provides important rights to credit cardholders when disputing transactions and resolving billing errors ,” said CFPB Director Rohit Chopra . “ As outstanding credit card debt approaches $ 1 trillion , the CFPB will be closely watching the conduct of the credit card industry .”:
The Original Lawsuit
The settlement requires approval by a judge in Providence , R . I . and resolves a CFPB lawsuit filed in January 2020 . In the lawsuit , the CFPB alleged Citizens Bank violated the TILA and Regulation Z by :
• Improperly denying customer reports of fraud and errors , and failing to provide refunds . The bank failed to reasonably investigate and resolve billing error notices and claims of unauthorized use by making customers “ jump through unnecessary and burdensome hoops , which are not required under the TILA to report fraud . The bank also failed to fully credit customers ’ accounts when unauthorized use and billing errors occurred by sometimes not refunding all finance charges or fees .
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