Citi Paying $18 Million for Credit Card Practices

The California Attorney General announced that Citigroup Inc. will pay $18 million, $14 million of which will be refunds, because of their credit card practices. 53,000 customers will receive refunds while California collects $3.5 million in penalties and damages. California customers will also receive 10 percent interest. These are for claims spanning from 1992 to 2003.

When a credit card is over paid and has a positive balance of more than $1, the banking regulation pertaining to credit cards says that the money goes to the card account, that it will be refunded to the customer upon request and that the bank will make a good faith effort to return that money to the customer if the balance is positive for more than six months.

Positive balances may have been created when a customer overpaid their bill or had a refund on the account when there was a lesser balance owed. The problem here is that Citi had a computerized sweep program that removed those positive balances. Citi says the practice was stopped in 2003 and that they began sending refunds prior to this settlement.

This is one more reason consumers need to read their bank statements. Sometimes statement review may be dismissed because you know there was no activity in your checking, savings or credit card account. But there still might have been an error. Always review your statements as soon as you can. Reviewing statements online is always encouraged to keep up with the latest activity in your accounts.