- Citigroup wasn’t giving customers with good behavior the full benefits they earned – good behavior includes activities such as paying bills on time
- The company revealed the news along with a plan issue refunds later in 2018
- Citigroup discovered the errors themselves and reported to a regulator immediately
- An investigation by an oversight organization did not reveal any misconduct
Citigroup is set to issue $335 million to card users whose annual percentage rates on their credit card bills should have been lower.
Citigroup found that the formula it was using to calculate APR didn’t give the full set of benefits promised to customers who practiced good behavior, such as paying bills on time.
The New York-based financial institution announced the issue last Friday, and said that they’ll be issuing checks to affected customers in the second half of 2018 while they investigate.
‘Citi has semi-annually reviewed U.S. credit-card accounts that experienced an interest-rate increase to identify those eligible for a rate reduction,’ spokeswoman Liz Fogarty said in a statement.
Citigroup will issue refunds to about 1.75 million customers after miscalculating benefits that should have been given to customers with good behavior
A periodic internal review identified potential flaws in the methodology used to reevaluate interest rates on some credit-card accounts,’ she added.
Refunds will affect about 1.75 million accounts, adding up to an average of $190 per refund, according to a report by Bloomberg.
This isn’t Citi’s first issue involving customer refunds in recent years. In 2015, the bank had to issue $700 million in refunds and pay $70 million in fines because of marketing practices involving add-ons to credit card accounts.
The refunds are also tied to the Credit Card Accountability Responsibility and Disclosure Act of 2009 – this requires lenders to review APR rates of those customers with good behavior to issue a potential rate reduction.
Citi gave out about $3 billion in savings from 2011 to 2017 under this law.
In 2015, Citi had to issue $700 million in refunds to customers for illegal marketing practices – an investigation of the most recent issue revealed no wrondoing