Citibank ordered to pay $770 million over credit card practices

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Citigroup Expected To Pay $7 Billion Settlement

Citigroup Inc's consumer bank has been ordered to pay $700 million in relief to borrowers for illegal credit card practices, the U.S. Consumer Financial Protection Bureau said.

The CFPB, set up under the 2010 Dodd-Frank Act aimed at reforming Wall Street, has been cracking down in recent years on credit card companies offering payment protection, credit score tracking and other add-on products.

Citi will also pay civil penalties of $35 million each to the consumer finance watchdog and the Office of the Comptroller of the Currency.

The settlement is the CFPB's tenth such case, Director Richard Cordray said in a statement on Tuesday.

"They (the CFPB) are just marching through the industry," FBR & Co financial policy analyst Edward Mills told Reuters.

"The CFPB loves to have big numbers like this, especially when the largest percentage of the fine goes back to customers because there's a lot of (political) push-back about the cost of the CFPB and the way they're funded."

Other major U.S. banks under that have been fined over credit card misconduct include JPMorgan Chase & Co and Bank of America Corp.

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Citibank ordered to pay $770 million over credit card practices
People walk past a branch of Citibank in New York on May 21, 2015. US and British regulators fined six major global banks a total of nearly 6 billion US dollar between them on May 20 for rigging the foreign exchange market and Labor interest rates.In the far-flung settlement, Barclays, JPMorgan Chase, Citicorp and the Royal Bank of Scotland all pleaded guilty to US Justice Department charges of conspiring to manipulate the massive currency market. AFP PHOTO/JEWEL SAMAD (Photo credit should read JEWEL SAMAD/AFP/Getty Images)
NEW YORK, NY - DECEMBER 05: People use ATM's at Citibank headquarters in Manhattan on December 5, 2012 in New York City. Citigroup Inc. today announced it was laying off 11,000 workers, about 4 percent of its workforce, in a move to slash costs. (Photo by Mario Tama/Getty Images)
A general view of Citibank in Washington, DC, December 30, 2014. AFP PHOTO/JIM WATSON (Photo credit should read JIM WATSON/AFP/Getty Images)
CHICAGO, IL - MAY 16: A Chicago police officer guards a Citibank branch from protestors demonstrating against home foreclosures May 16, 2012 in Chicago, Illinois. This was the third day of protests in what is expected to be a full week of demonstrations as the city prepares to host the NATO Summit May 20-21. (Photo by Scott Olson/Getty Images)
NEW YORK, NY - OCTOBER 28: Protesters associated with Occupy Wall Street march past a Citibank branch in Manhattan on October 28, 2011 in New York City. Hundreds of protesters delivered 6,000 letters from angry bank customers to the headquarters of Bank of America, Morgan Stanley, Wells Fargo, Citigroup and JP Morgan Chase during the march. (Photo by Mario Tama/Getty Images)
Citibank provides a mobile surcharge-free ATM to Hoboken residents suffering from power outages as a result of Hurricane Sandy on Friday, Nov. 2, 2012 in Hoboken, N.J. (Photo by Charles Sykes/Invision for Citi/AP Images)
A Citibank sign is seen outside offices in Mountain View, Calif., Tuesday, Jan. 19, 2010. Citigroup Inc. became the latest bank to take a cautious view of consumers' credit problems, reporting a $7.77 billion fourth-quarter loss due to failed loans and the costs of repaying government bailout money.(AP Photo/Paul Sakuma)
A pedestrian walks past a Citibank branch in Boston, Monday, April 16, 2007. First-quarter profit at Citigroup Inc. dropped 11 percent, but still came in better then expected, as the nation's largest financial institution took a charge to cover a massive restructuring designed to cut costs and improve earnings. (AP Photo/Josh Reynolds) . (AP Photo/Josh Reynolds)
SAN RAFAEL, CA - JANUARY 15: A sign stands in front of a Citibank branch office on January 15, 2015 in San Rafael, California. Citigroup Inc reported an 86 percent decline in fourth quarter earnings with net profits of $346 million, or 6 cents per share, compared to $2.60 billion, or 82 cents per share, one year ago. (Photo by Justin Sullivan/Getty Images)
SAN FRANCISCO, CA - APRIL 18: A pedestrian walks by a CitiBank branch office on April 18, 2011 in San Francisco, California. Citigroup's first-quarter profit dropped 32 percent with quarterly earnings of $3.0 billion, or 10 cents per share, compared to $4.4 billion, or 15 cents per share one year ago. (Photo by Justin Sullivan/Getty Images)
DES PLAINES, IL - NOVEMBER 11: The Citibank logo is seen at a Citibank branch office November 11, 2008 in Des Plaines, Illinois. Citigroup announced Monday that they will be stopping foreclosures for borrowers who live in their own homes and who make enough money to pay reduced mortgage payments. The bank also is making plans to reach out to nearly 500,000 homeowners who are at risk of falling behind on their mortgage payments (Photo by Justin Sullivan/Getty Images)
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Tuesday's settlement is about 1 percent of the bank's estimated revenue for 2015, according to Thomson Reuters StarMine.

"Citi is fully reserved to pay costs associated with the agreements," the bank said in a statement.

As of May 21, Citi had paid out over $17 billion in fines and settlements since the financial crisis.

The CFPB said that about 7 million customer accounts were affected by Citibank's "deceptive marketing" practices, which included misrepresenting costs and fees and charging customers for services they did not receive.

A Citibank unit also "deceptively" charged nearly 1.8 million consumer accounts often unnecessary same-day payment fees while collecting payments, the CFPB said.

Citi said it had been issuing refunds and had stopped selling products that were part of its agreements with the regulators, including credit monitoring and debt protection products.

Capital One Financial Corp, American Express Co and Discover Financial Services are among other card issuers that have been fined by the CFPB since 2012.

Citi shares were up 0.5 percent at $59.13 in late afternoon trading on the New York Stock Exchange.

(Additional reporting by Elvina Nawaguna in Washington; Editing by Emily Stephenson and Kirti Pandey)

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