Citibank to reimburse some consumers in N.J. for credit card overcharges

Citibank will pay a total of $4.2 million to eligible consumers in New Jersey and four other states to resolve allegations the company overcharged tens of thousands of consumers for credit card interest.

As part of a legal settlement with five states, Citibank will refund a total of about $1.13 million to more than 7,000 eligible New Jersey consumers. Eligible consumers in New Jersey will receive between $55.93 and $2,256.76 each, with an average refund per consumer of about $159, state officials said.

About 25,000 current and former Citibank customers in New Jersey, North Carolina, Pennsylvania, Iowa, and Massachusetts will receive refund checks as a result of the agreement, officials said.  

“We’re committed to ensuring that New Jersey consumers are treated fairly by credit card companies and financial institutions,” New Jersey Attorney General Gurbir Grewal said in a written statement. “Today, we’re happy to be putting more than a million dollars back in the pockets of New Jersey residents.”

A multi-state investigation led to the settlement. State officials said it was triggered by Citibank’s failure to properly reevaluate and reduce the annual percentage rate (APR) for certain consumer credit card accounts as required by the federal Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act), as well as by States consumer protection laws. The CARD Act requires credit card issuing banks to perform a “look back” at least every six months to review whether, for accounts where the bank has increased the APR due to credit risk or other factors, the factors that prompted the increase have changed. When the look-back review yields information that calls for it, the law requires banks to reduce the account’s APR.

The joint investigation by five states found that for a period of nearly seven years beginning in early 2011, Citibank failed to properly lower credit card interest rates for consumers who were entitled to reductions in their APR.

“Through this settlement, we are holding Citibank accountable for its failure to treat credit cardholders fairly, and at the same time providing important relief to those consumers,” said New Jersey Division of Consumer Affairs Acting Director Kaitlin Caruso in a written statement. “I’m certain affected Citibank cardholders in New Jersey and across the country could have used the extra dollars they were charged in interest for other purposes, and we’re pleased to have obtained refunds for the thousands of New Jersey consumers who were harmed.” 

Citibank issued a statement Monday regarding the settlement.

“As Citi previously disclosed in early 2018, we self-identified, self-reported and corrected issues with APR rate re-evaluations as required by Regulation Z of the CARD Act. When we reviewed our implementation of the regulation, we identified a small portion of credit card accounts that received impermissible rate increases. We resolved the matter with the Consumer Financial Protection Bureau, refunded customers, and completed a comprehensive internal review to ensure our practices meet regulatory requirements,” reads the statement. “Today, Citi has voluntarily signed an agreement with five states totaling $4.2 million in which the states will provide certain consumers with payments related to this legacy issue. The states will administer and distribute payments at their discretion. While Citi denies violating the states’ consumer protection laws, we are pleased to put this matter behind us.”