Class Action

Citigroup To Pay $18 Million for ?Sweeping? Customers? Accounts

By classlawblog

The AP reports that ? as settlement of a California Attorney General investigation ? Citigroup Inc. will pay nearly $18 million in refunds and civil penalties for the illegal sweeping of $14 million from customers? accounts between 1992 and 2003.

During that time, Citigroup operated an automated ?account sweeping? program that would, without notice, remove positive balances from customers? credit card accounts and pocket the money. Accounts can show positive balances if, for example, a customer double-paid a bill or returned a purchase for credit. The sweeps targeted more than 53,000 customers nationwide. All of the affected accounts were in a recovery status, which includes accounts of customers who had died, sought bankruptcy protection, or been the target of litigation or other collection efforts by Citigroup.

According to the Attorney General: ?[t]he company knowingly stole from its customers, mostly poor people and the recently deceased, when it designed and implemented the sweeps.?

The investigation leading to the settlement started in 2005 as part of an inquiry into whether the company violated the California False Claims Act. Besides the $14 million in refunds to victimized customers, Citigroup will, as part of the settlement, be permanently prevented from re-initiating the credit sweeps; pay $3.5 million in damages and civil penalties to the State of California; and be subject to post-settlement compliance audits to ensure Citigroup?s continued adherence to the terms of the settlement.

Full post as published by ClassLawBlog.com on September 09, 2008 (boomark / email).