Citizens Bank recently reached a settlement with the Consumer Finance and Protection Bureau (CFPB) in order to resolve claims that the bank violated regulations and laws protecting consumers who dispute charges on their credit card accounts.
Citizens Bank, headquartered in Providence, R.I., faces a $9 million civil money penalty for allegations that the bank failed to properly respond to credit card disputes and fraud claims by customers, a recent CFPB news release said.
“Federal law provides important rights to credit cardholders when disputing transactions and resolving billing errors,” Rohit Chopra, CFPB director, said in the release. “As outstanding credit card debt approaches $1 trillion, the CFPB will be closely watching the conduct of the credit card industry.”
The Truth in Lending Act protects consumers against credit card billing errors and fraud. Under federal law, credit card issuers are required to investigate allegations of fraud, notify the affected individual and refund the error or fraudulent amount in valid cases. The CFPB originally filed the lawsuit against Citizens at the beginning of 2020, claiming that the bank violated the Truth in Lending Act by failing to properly investigate claims of fraud by customers and failing to provide refunds in valid cases. The lawsuit also claimed that Citizens failed to provide required documentation to customers notifying them of the status of their dispute claims and failed to provide required credit counseling information to customers at the bank's toll-free number designated for that purpose—in some cases even rerouting customer calls to the bank’s collections department.
The CFPB has the authority to require that Citizens resolve those violations and order the bank to pay a $9 million penalty to the CFPB’s victims relief fund.
Citizens Bank is one of the 15 largest consumer banks in the U.S., with locations in 14 states and the District of Columbia. The bank is a subsidiary of Citizens Financial Group, which reportedly had $222 billion in assets as of March 2023.