The unfortunate reality for many consumers is that they often feel powerless in their dealings with credit card companies. While this is understandable given the sheer size of these lending institutions and their seemingly inexhaustible resources, it’s important for consumers to understand that they are not without protection.
For example, the Consumer Financial Protection Bureau routinely makes headlines for its rigorous enforcement of federal consumer financial protection laws. Indeed, the federal agency made headlines earlier this week for its multi-million dollar settlement with one of the nation’s largest credit card companies on behalf of consumers who were “victimized by slipshod practices.”
The settlement in question was reached with New York-based Citibank over allegations that the banking giant engaged in illegal debt collection practices and sales of debt.
Specifically, the CFPB accused Citibank of the following in relation to charged-off credit card accounts sold to third-party debt collectors from 2010 to 2013 that were otherwise classified as unlikely to be repaid:
- Failing to forward almost 14,000 consumer payments totaling close to $1 million to the third-party debt collectors, such that these consumers had to endure collection efforts despite paying off their accounts
- Misreporting the annual percentage rate in the accounts sold by more than 1 percent, such that consumers wound up overpaying $4.89 million to third-party debt collectors
As part of the settlement with the CFPB, Citibank must pay a $3 million fine and repay the aforementioned $4.89 million to affected consumers.
Furthermore, it requires the credit card company to comply with an order from a New Jersey state court in a case involving accusations that it and two law firms it retained to collect on debts in that state falsified information contained in affidavits. This order calls for Citibank to repay $11 million to consumers and, more significantly, to cease collection efforts on another $34 million in debts.
What the forgoing should serve to illustrate is that consumers are not powerless in their dealings with credit card companies. Indeed, in the event your credit card debt has become unmanageable despite your best efforts and the credit card company is unwilling to work with you, you can take steps to secure a fresh financial start.