WASHINGTON, D.C. — The Consumer Financial Protection Bureau (CFPB) is ordering Citibank NA, to pay $3.75 million in compensation to consumers as well as pay a $2.75 million civil penalty for illegal student loan servicing practices.
Citibank, based in Sioux Falls South Dakota, has been cited by the CFPB for misleading borrowers by incorrectly charging late fees and for adding interest to student's loan balances while they were still in school and eligible for deferred loan payments.
According to the CFPB, Citibank, one of the world's largest banks with more than $1.4 trillion in assets, also misled its consumers regarding how much they were required to pay in their monthly bills and did not disclose required information after denying borrowers' requests to release loan cosigners.
“Citibank’s servicing failures made it more costly and confusing for borrowers trying to pay back their student loans,” then CFPB Director Richard Cordray said in a new release. “We are ordering Citibank to fix its servicing problems and provide redress to borrowers who were harmed.”
The CFPB enforcement action against Citibank requires the company to pay $3.75 million in restitution to the consumers who were harmed by the lending practices, make changes to their servicing practices and pay the $2.75 million penalty to the CFPB's civil penalty fund.