Consumer Fraud

Citizens Bank To Pay $18.5 Million For Pocketing Deposit Discrepancies

whistleblower 5 370x210 Citizens Bank To Pay $18.5 Million For Pocketing Deposit DiscrepanciesCitizens Bank will pay $18.5 million in refunds and penalties for its failure to credit consumers with the full amount of their deposits, the Consumer Financial Protection Bureau (CFPB) announced Aug. 12.

CFPB Director Richard Cordray said that the Cleveland, Ohio-based bank pocketed the extra money when the amount customers wrote on their deposit slips was less than the amount they actually deposited.

“Citizens Bank regularly denied customers the full credits of their deposits when there were discrepancies between deposit slips and the actual money transferred into the bank,” Mr. Cordray said in a statement. “The bank chose to ignore these discrepancies and harmed many consumers by pocketing the difference.”

A CFPB investigation determined the fraud occurred during a six-year period starting in January 2008. During that time, the bank only looked into discrepancies in the deposits when the amount was more than $50, the CFPB said. From Sept. 2012 to Nov. 2013, Citizens lowered the bar to $25 and checked only into discrepancies above that amount.

According to the CFPB, Citizen’s Bank’s failure to credit customers with their full amount violated the Dodd-Frank Wall Street Reform and Consumer Protection Act, which prohibits banks from using unfair and deceptive practices on consumers.

Citizens Bank also told consumers that their deposits were subject to verification, giving customers the impression that it would take steps to ensure their checking and savings accounts were being credited with the correct amount. However, the bank failed to verify the correct amount unless they were above the $25 and $50 thresholds.

The CFPB ordered Citizen’s Bank to pay $11 million in refunds to customers and a $7.5 million penalty for the violations.

Headquartered in Providence, R.I., Citizens Bank is the thirteenth largest retail bank in the U.S. with nearly $140 billion in assets and branches in 11 states.

Source: Consumer Financial Protection Bureau (CFPB)