Citibank has agreed to pay $4.2 million to resolve allegations that it overcharged credit card interest for about 25,000 customers in Iowa and four other states.
As a result of the settlement, the bank will refund $216,325 to 1,407 Iowa customers, according to a news release from Iowa Attorney General Tom Miller’s office on Monday.
The average Iowa refund will be $153.75.
New York City-based Citibank has branches throughout the Corridor.
The other states involved in the settlement were Massachusetts, New Jersey, North Carolina and Pennsylvania.
“The investigation arose from Citibank’s failure, from February 2011 to August 2017, to properly reevaluate and reduce the annual percentage rate, or APR, for certain consumer credit card accounts consistent with the requirements of the Credit Card Accountability Responsibility and Disclosure Act of 2009,” the release said.
“For six and a half years, Citibank failed to properly lower credit card interest rates for consumers who were entitled to reductions in their APR.”
Miller’s office said eligible consumers will be mailed their refunds in the middle of 2021.
Consumers with questions can call (855) 914-4657, the release said.
The CARD Act directs credit-card-issuing banks to perform a review at least every six months to determine if factors that required APR rates to be increased have changed, and if so, then to reduce the accounts’ APR, Miller’s office said.
“As Citi previously disclosed in early 2018, we self-identified, self-reported and corrected issues with APR rate re-evaluations as required by Regulation Z of the CARD Act,” Citibank said in an email to The Gazette on Monday,
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“When we reviewed our implementation of the regulation, we identified a small portion of credit card accounts that received impermissible rate increases. We resolved the matter with the Consumer Financial Protection Bureau, refunded customers and completed a comprehensive internal review to ensure our practices meet regulatory requirements.”
Citi said in its email that, “While Citi denies violating the states’ consumer protection laws, we are pleased to put this matter behind us.”