Citi has 'moved on' from credit card complaints, exec says

UPDATE: This story now includes information from emails that Citi sent to customers, including Janice Lintz, explaining that the account lockouts were necessary to guard against fraud by others. Lintz is not accused of any wrongdoing.

A Citi executive says the bank stands by its handling of customer complaints against its new premium credit card, which were publicized by the Wall Street Journal last week.

Pam Habner, Citi's head of U.S. branded cards, defended the bank's actions at American Banker's Women in Banking conference in New York on Tuesday.

"We feel like we have done the right thing for all of our good customers, and we move on," Habner told Chana Schoenberger, American Banker's editor-in-chief.

Citi launched the Strata Elite credit card in July, charging customers $595 per year for a variety of travel, dining and entertainment perks. Those benefits include generous reward points, hundreds of dollars in discounts at hotels, airlines and other businesses, and free access to airport lounges.

Another selling point is the card's price. Strata Elite, Citi's first card for high-end customers in four years, offers a lower annual fee than American Express's Platinum card, which costs $695 per year, and JPMorganChase's Sapphire Reserve card, which costs $795.

But not all customers have been satisfied. On Oct. 16, the Wall Street Journal published a story describing the complaints of at least three of the card's users, who said they were locked out of their accounts for weeks and faced multiple hurdles to getting the accounts reactivated.

In an email to customers seen by American Banker, Citi said the lockouts were necessary to guard against fraud.

"At Citi, we take your security seriously and sometimes this means we need additional information to verify an account," the email said. "As a result, your account is on a temporary block for verification purposes."

To unblock their cards, the email asked customers to mail in an I.R.S. form verifying their income. It also apologized for the inconvenience, and offered to refund the annual fees and grant 100,000 points once the form was received.

But in at least two cases reported by the Wall Street Journal, customers allegedly sent in the paperwork but could not get Citi to confirm that they'd received it, despite repeated inquiries.

One card user, Janice Lintz, said the bank threatened to close all six of her Citi accounts unless it received the I.R.S. form within 30 days. But after numerous calls to customer service, she was unable to confirm that the form had gone through. Ultimately, she chose to cut short a vacation in Bangladesh in order to solve the problem from home.

"Last I checked, there's no criminal charges against me, no indictment," Lintz, 62, told the Journal. "So why did I have to fly all the way back from Bangladesh?"

Lintz has not been accused of any wrongdoing. And in a letter seen by American Banker, dated Oct. 21, Citi told her it regretted her ordeal. In addition, the bank offered to refund her annual fee, award her the 100,000 points, and pay her $720 for her courier fees and last-minute flight home.

It also unblocked her card.

"We certainly regret any inconvenience or difficulty you may have experienced regarding the recent review of your account and the status of your IRS Form 4506-C," Citi wrote. "We appreciate your efforts in submitting the required documentation and are pleased to confirm that the spending block on your accounts with us have now been removed."

On Tuesday, Habner said the bank did the right thing. While the Citi executive said she could not go into detail on the record, she framed the issue generally as a matter of protecting against bad actors.

"We stand behind some of the actions we took to safeguard good customers and to stave off customers that had bad intent," Habner said.

Overall, Habner said, the launch of Strata Elite has gone "better than we expected," with demand for the card far exceeding what Citi anticipated.

"When you launch a new product … things happen," Habner said. "We have to protect the bank, and we have to protect other consumers. And when those customers are treated in a certain way, they can be quite noisy and public about that."

In an email to American Banker, a Citi spokesperson elaborated that the card lockouts were a side effect of a broader security measure.

"As is typical with any new product, our fraud prevention operates at a high frequency, and unfortunately this inadvertently affected some of our valued cardmembers," the spokesperson said. "We recognize and regret the inconvenience this caused and took full accountability, and as Pam noted, we are moving on and are pushing forward from this incident to improve our communications with customers. We've since identified where adjustments were needed and are actively resolving the issue."

Habner was No. 22 this year on American Banker's list of the Most Powerful Women in Banking. Before joining Citi five years ago, she spent close to six years at JPMorganChase, where she launched the bank's Sapphire Reserve card.