Banking and Finance Law Daily CFPB alleges Citizens Bank failures in response to consumer disputes
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Friday, January 31, 2020

CFPB alleges Citizens Bank failures in response to consumer disputes

By Colleen M. Svelnis, J.D.

The Bureau’s complaint alleges repeated violations of TILA and Reg. Z due to failing to properly manage and respond to credit card disputes.

The Consumer Financial Protection Bureau has filed a complaint in the U.S. District Court for the District of Rhode Island against Citizens Bank N.A., headquartered in Providence, R.I. The complaint alleges that Citizens Bank violated the Truth in Lending Act (TILA) and Reg. Z for several years by failing to properly manage and respond to credit card disputes. According to the CFPB’s complaint, Citizens Bank automatically denied consumers’ unauthorized use claims and billing error notices when the consumers failed to return a signed fraud affidavit required by the bank. The Bureau asked the court to permanently enjoin Citizens Bank from committing future violations of the law, and for additional relief including monetary relief for consumer redress; a civil money penalty against the bank; and disgorgement of ill-gotten gains. Citizens Bank is wholly owned subsidiary of Citizens Financial Group, Inc.

According to the complaint, Citizens Bank also failed to consistently refund finance charges and fees on billing error notices and unauthorized use claims, including finance charges and fees, when it resolved billing error notices or claims of unauthorized use in consumers’ favor. The complaint detailed how Citizens Bank’s credit card Payment Operations Department failed to consistently send each consumer a written acknowledgement of the claim within 30 days of the bank’s receipt of billing error notices. In addition, if the bank conducted an investigation and found that no billing error had occurred, it did not consistently send each consumer a written notice of denial after receiving the claim.

The Fair Credit Billing Act (FCBA), enacted and incorporated into TILA in 1974, includes protections for credit card users who have billing errors. TILA also contains protections for consumers who experience unauthorized use of their credit cards. When a card issuer receives a claim of unauthorized use, it is required to investigate the claim and refund the amount in question and any related charges if unauthorized use occurred. A claim of unauthorized use may also constitute a billing error notice if it meets Reg. Z’s billing error notice requirements.

The complaint further alleges that for several years Citizens Bank violated TILA by violating provisions passed under the Credit Card Accountability Responsibility and Disclosure (CARD) Act. According to the complaint, Citizens Bank had no policies or procedures in place to ensure that its employees provided credit counseling referral information when consumers called the phone line set aside for this purpose. The Bureau alleges that the bank violated TILA and Reg. Z by failing to provide these referrals. These alleged violations of TILA—including those under the FCBA and the CARD Act—and Reg. Z also constitute violations of the Consumer Financial Protection Act, according to the Bureau.

Companies: Citizens Bank, N.A.; Citizens Financial Group, Inc.

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