Citizens Bank Fined by CFPB, FDIC and OCC

In a news release from the Consumer Financial Protection Bureau (CFPB) yesterday the CFPB announced that the CFPB, the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) have all issued fines against Citizens Bank for allegedly failing to credit consumers for the full amounts of their deposited funds.

Citizens Bank, N.A., was formerly known as RBS Citizens Bank, N.A.; Citizens Financial Group, Inc., formerly known as RBS Citizens Financial Group, Inc.; and Citizens Bank of Pennsylvania.

The bank kept money from deposit discrepancies when receipts did not match actual money transferred. “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,” said CFPB Director Richard Cordray. “The bank chose to ignore these discrepancies and harmed many consumers by pocketing the difference.”

The CFPB investigation found that from January 1, 2008 to November 30, 2013, Citizens Bank violated the Dodd-Frank Wall Street Reform and Consumer Protection Act’s prohibition on unfair and deceptive practices by failing to properly credit consumers’ checking and savings accounts. In cases where the bank’s scanner misread either the deposit slip or the checks, or if the total on the deposit slip did not equal the total of the actual checks, Citizens Bank did not take action to fix the mistake if it fell below a certain dollar amount.

Specifically, the CFPB found that Citizens Bank failed to credit consumers the full amount of their deposits and falsely claimed that it would verify deposits

The CFPB consent order requires the bank to provide approximately $11 million in refunds to consumers and pay a $7.5 million penalty for the violations.

The CFPB took the action in coordination with the FDIC and the OCC. The FDIC separately ordered Citizens Bank of Pennsylvania to pay restitution and a $3 million civil penalty. The OCC separately ordered Citizens Bank, N.A., to pay restitution and a $10 million civil penalty. In total, Citizens Bank must pay about $11 million in consumer refunds and $20.5 million in federal penalties for these coordinated actions. As part of these actions, the FDIC and OCC are ordering additional relief relating to business accounts.

insideARM Perspective

While the activity that was the subject of this CFPB action did not involve collections nor recovery efforts, the announcement is important for a couple of reasons. First, the coordinated activity between the CFPB, the OCC and the FDIC should be noted. The CFPB is following up on their promise to coordinate their investigations and enforcement activity with other regulatory bodies. Second, the action represents yet another major fine against a significant financial institution.