Thread: Citizens Bank fined at least $34.5 million for pocketing customers’ cash

Citizens Bank fined at least $34.5 million for pocketing customers’ cash

By Jonnelle Marte August 12 at 3:10 PM


Pedestrians walk past a Citizens Bank location in downtown Boston, Mass. (Kelvin Ma/Bloomberg)

Citizens Bank failed to give customers their full deposits at times when the size of the deposit didn’t match the number written on deposit slips, regulators said Wednesday.

The bank will need to pay a penalty of at least $34.5 million because of those “deceptive practices,” according to the joint enforcement action by the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency.

Instead of giving workers the difference when there was a mismatch in the paperwork, the bank at times pocketed the cash, officials said. The discrepancies, which arose between 2008 and 2013, came up when the bank’s scanners misread the number on deposit slips or when customers jotted down the wrong amount, officials said.

Citizens told customers that discrepancies would be investigated and corrected, but it only did so for deposit amounts above $50, and later above $25. Over time, the money pocketed by the bank added up to millions of dollars.

“This is sloppy banking,” said CFPB director Richard Cordray.

“Many consumers lost money that rightfully belonged to them.”

In addition to $20.5 million in federal penalties, Citizens will need to pay $11 million to consumers and $3 million to businesses that didn’t receive their full deposits, officials said.

Customers should get not only the difference in the deposit amounts, but interest and a refund of any fees they may have faced as a result of the shortfall, including overdraft fees, insufficient fund fees and maintenance fees.

Officials said the error may have led some customers to receive more money than they actually deposited, but that those cases were not part of the enforcement action. In a statement, Citizens said the amounts overpaid to customers and underpaid to others “were approximately equal.”

The CFPB looped in other regulators after getting a tip from a whistle blower about the practice, officials said. Citizens Bank said the reconciliation process was automated at the end of 2013 after the bank rolled out a new teller system. “We are now working with our regulators to make appropriate redress as quickly as possible,” the statement said.

Customers owed refunds don’t have to do anything to receive their refunds, regulators said, adding that the bank has already taken steps to improve its practices.

http://www.washingtonpost.com/news/g...ustomers-cash/

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Citizens Bank Fined for Failing to Credit Consumers for Full Deposits

Bank receipts didn’t match actual money transferred, shorting consumers millions of dollars, CFPB says

ENLARGE
The CFPB said Citizens Bank often failed to give consumers full credit when the amount scanned or written on the deposit slip was less than the amount of the checks and cash that customers actually deposited. PHOTO: NICOLAUS CZARNECKI/ZUMA PRESS


By ANNAMARIA ANDRIOTIS
Updated Aug. 12, 2015 3:36 p.m. ET0 COMMENTS

Citizens Financial Group Inc. has been ordered to pay at least $34.5 million for failing to credit to customers’ accounts the full amount of their deposits.

The order was part of a joint enforcement action announced Wednesday by the Consumer Financial Protection Bureau, Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency.

The CFPB said its investigation found that Citizens often failed to give consumers full credit when the amount scanned or manually written on the deposit slip was less than the amount of the checks and cash that customers actually deposited. The investigation looked at practices from January 2008 through November 2013 and found that the bank violated the Dodd-Frank law in not fixing the discrepancies.

The bank’s actions resulted in consumers being shorted millions of dollars over the years, the CFPB said.

The bureau said Citizens falsely told customers it would verify their deposits even though the bank’s policy was to verify and correct deposit inaccuracies only if they were above $25 or $50 thresholds.

The CFPB said it became aware of wrongdoing from a whistleblower.

“When a depository institution violates the basic tenet of what it means to offer a deposit account—that is, to receive and keep safe the customer’s funds—it imbues a deep sense of mistrust,” said CFPB Director Richard Cordray on Wednesday. “When consumers deposited their money into Citizens Bank, they trusted that all of their money would go into their accounts. But our investigation found that Citizens regularly denied some customers the full credits of their deposits.”

This marks the CFPB’s first action involving illegal practices in connection with deposit processing, an area in which the bureau said it would continue to be vigilant.

Citizens is neither admitting or denying wrongdoing and said it is working with regulators to compensate customers quickly.

In a statement, the bank said it used certain practices to “ensure the next-day crediting of deposits in situations when deposit slips contained mathematical errors. However, these past practices and disclosures, principally before early 2011, could have been better.”

The bank said it implemented a new teller system in the fourth quarter of 2013.

In addition to undercrediting customers, the bank said the errors on the deposit slips also overcredited some depositors. Customers who were overcredited will keep the additional funds and those who were undercredited will be reimbursed, according to the bank statement.

The bank will have to pay about $11 million in refunds to consumers and a $7.5 million penalty for the violations to the CFPB.

The FDIC also ordered a $3 million civil penalty, and $3 million to be refunded to business account holders, and the OCC ordered a $10 million penalty. The OCC said the amount it is ordering the bank to pay customers hasn’t yet been determined.

http://www.wsj.com/articles/citizens...its-1439401509