Citizens Bank Fined $9 Million for Mishandling Credit Card Disputes

Bank failed to provide refunds to customers and ignored fraud complaints

Citizens Bank, large, regional bank with headquarters in Rhode Island, has been fined $9 million by the Consumer Financial Protection Bureau (CFPB) for its improper handling of customer credit card disputes. The misconduct by Citizens includes improperly dismissing fraud complaints and failing to provide refunds to customers even when it was established those refunds were owed.

“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 CFPB outlined two major issues with how Citizens Bank handled customer complaints around credit card fraud:

• 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 Truth in Lending Act, 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 owed to customers.
• Failing to provide required documents and referrals: The bank did not provide certain individuals who submitted billing error notices with required acknowledgment and denial notices, which inform them that their disputes have been received and, if applicable to a person’s case, that the dispute was denied. The bank also did not disclose required credit counseling information to individuals who called the bank’s toll-free number designated for that purpose, and instead routed some individuals to the bank’s collections department.

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