WASHINGTON (Legal Newsline) — In two separate cases, the Consumer Financial Protection Bureau has taken action against Citibank due to allegations of illegal debt sales and debt collection practices.
In the first action, the CFPB ordered Citibank to pay close to $5 million in consumer relief and $3 million in penalties for allegedly selling credit card debt with inflated interest rates.
The second action deals with Citibank and two debt collection law firms. The CFPB charges these companies with falsifying court documents filed in debt collection cases in New Jersey state courts. The CFPB seeks $11 million in refunds to consumers and the forgoing of $34 million in still uncollected money from 7,000 consumers.
“Citibank sent inaccurate information to buyers when it sold off credit card debt and it also used law firms that altered court documents,” said CFPB Director Richard Cordray. “Today’s action provides redress to consumers who were victimized by slipshod practices as part of our ongoing work to fight abuses in the debt collection market.”
From 2010 to 2013, Citibank – a national bank with headquarters in New York that issues consumer credit cards – sold portfolios of charged-off credit card accounts. These accounts are ones the bank deems are unlikely to be repaid. The buyer, usually debt collection firms, can then attempt to recoup the funds.