CFPB Takes Action Against Citibank for Debt Collection, Sales Practices

February 23, 2016

On Tuesday, February 23, 2016, the CFPB issued two consent orders against Citibank, settling allegations the bank engaged in illegal debt collection and debt sales practices. In the first action, the Bureau alleges Citibank violated Dodd-Frank’s ban on unfair, deceptive or abusive acts or practices when it sold consumer credit card debt to debt buyers with “inflated interest rates” and failed to promptly forward payments to debt buyers. According to the CFPB, between February of 2010 and June of 2013, nearly 130,000 credit card accounts were subject to inflated interest rates, and 14,000 consumer payments totaling $1 million were delayed.  As a result, Citibank has agreed to:

  • Provide accurate information in debt sales;
  • Stop selling debt which is unverified, in dispute, or within 150 days of the statute of limitations;
  • Prohibit debt resales by debt buyers;
  • Provide account-level information to consumers subject to a debt sale;
  • Refund $4.89 million to approximately 2,100 consumers; and
  • Pay a $3 million civil penalty fine.


In the second action, covering the period between 2010 and 2013, the CFPB brought enforcement actions against Citibank, two affiliates and two debt collection law firms for allegedly altering affidavits in debt collection lawsuits. According to the Citibank consent order, in May of 2011, the bank discovered its collection law firms had altered affidavits as to dates or amounts due. Once revealed, the bank stopped referring new accounts to these firms and requested the Superior Court of New Jersey dismiss pending actions as of September 12, 2011. The consent order requires Citibank to refund $11 million to affected consumers and stop collections on another $34 million in debt. However, pursuant to its Responsible Business Conduct bulletin, the Bureau did not impose a civil penalty. In contrast, the two collection law firms were subject to a $65,000 and $15,000 civil penalty, respectively.