Citibank will refund $335 million, or $190 apiece for 1.75 million accounts, to customers for miscalculating interest rate charges over eight years, but will not pay an additional penalty to the Consumer Financial Protection Bureau, the agency said Friday.
The CFPB said that because the issue was self-reported and the bank took steps to correct it, the agency would not assess an additional penalty on top of the mandated restitution.
"The bureau did not assess civil money penalties based on a number of factors, including that Citibank self-identified and self-reported the violations to the Bureau, and self-initiated remediation to affected consumers," the CFPB said in a press release.
The move was a break from the agency's previous assessments.
Acting CFPB Director Mick Mulvaney's predecessor, Richard Cordray,
A spokesperson for Citi declined to comment.
Citi was cited by the CFPB for using tactics in its methodology to reevaluate rates on some credit card accounts that decreased the likelihood that consumers would qualify for a rate reduction. The bank also improperly used FICO scores to disqualify some consumers for rate reductions, the consent order said.
The case has been watched closely by Democrats after Citigroup disclosed earlier this year that it would have to refund customers.
In March, seven Democratic senators, Elizabeth Warren of Massachusetts, sent a letter to Mulvaney questioning whether he planned to issue penalties against Citi for the violations.
"Will the CFPB investigate compliance failures at Citigroup that allowed this practice to continue for five years?" the letter stated. "Will the Bureau seek additional penalties?"
In 2009, Congress passed the Credit Card Accountability Responsibility and Disclosure Act, which protects consumers from retroactive interest rate increases and changes in the fine print to credit card terms, among other disclosure and opt-out requirements.
The CFPB said Citi violated the Truth in Lending Act and Regulation Z, which implemented the CARD Act’s annual percentage rate re-evaluation requirements.
The bank discovered and self-reported the deficiencies and errors to the CFPB in early 2017. The CFPB said Citi "voluntarily initiated the process of providing restitution to affected consumers and implementing enhancements to its compliance management systems, worked proactively with the bureau, and kept the bureau apprised of additional findings as its review progressed."
