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Citibank Will Stop Collecting $34 Million in Credit Card Debt

stltoday.com | February 25, 2016

By Jeanine Skowronski

Certain credit card debtors are in for some relief.

Citibank has agreed to provide nearly $16 million in consumer relief and forgo collecting on about $34 million in debt held by nearly 7,000 cardholders as part of two enforcement actions taken by the Consumer Financial Protection Bureau.

The CFPB consent orders, released on Tuesday, allege that, from February 2010 until June 2013, Citibank sold credit card debt with inflated interest rates and failed to forward consumer payments promptly to debt buyers, who went on try to collect on 128,809 accounts sold to 16 different debt buyers. For some accounts, Citibank claimed the APR was 29% when it was actually 0%, the CFPB said.

Citibank also allegedly hired two debt collection law firms — Faloni & Associates, LLC, of Fairfield, N.J., and Solomon & Solomon, P.C. of Albany, N.Y. — that went on to alter affidavits filed in New Jersey debt collection lawsuits. The dates of the affidavits, the amount of the debt allegedly owed, or both, were changed after they were executed, a violation of the Fair Debt Collection Practices Act, the CFPB said.

Per the agency, Citibank learned that one of its law firms had altered affidavits back in 2011 and stopped referring new credit card accounts to it. At Citibank’s request, a New Jersey court dismissed actions pending as of Sept. 12, 2011, that Citibank identified as involving altered affidavits or incorrect information.

The bank did not admit or deny any of the CFPB’s allegations as part of the enforcement action.

“We are pleased to resolve these legacy issues, which impacted a small percentage of customers in the U.S.,” the bank said in an email to Credit.com.

Providing Consumer Relief

In addition to the consumer relief — an estimated $4.89 million for roughly 2,100 consumers affected by the purportedly inflated APRs and $11 million in refunds to consumers affected by the allegedly altered affidavits, which has already been paid out — Citibank must pay a $3 million penalty to the CFPB’s Civil Penalty Fund. It must also stop selling debt it cannot verify, including protections that prohibit debt buyers from reselling the debt and provide basic consumer information, including the name of the original creditor, the credit agreement and recent account statements.

Solomon & Solomon, P.C., and Faloni & Associates, LLC, also must pay $65,000 and $15,000, respectively, to the CFPB’s Civil Penalty Fund. Both firms admitted no wrongdoing as part of the enforcement action.

“Solomon entered into the Settlement Agreement merely to avoid the anticipated costs of defending itself in litigation against the Bureau, which would have likely exceeded the amount of the fine,” the law firm said in an email to Credit.com. “Solomon remains committed to providing its clients with high-quality legal services that comply with the law and treat consumers fairly. To that end, Solomon has in place a robust compliance management system that it updates and enhances periodically to keep pace with changes in the law and industry best practices.”

Faloni & Associates, LLC did not respond immediately to request for comment.

The CFPB has made debt collection practices a focus in recent years. This past summer, JPMorgan Chase was fined $216 million for selling bad credit card debt and illegally robo-signing court documents. And American Express was fined back in 2012 for illegal credit card debt collection practices.

“Citibank sent inaccurate information to buyers when it sold off credit card debt and it also used law firms that altered court documents,” CFPB Director Richard Cordray said in a press release. “Today’s action provides redress to consumers who were victimized by slipshod practices as part of our ongoing work to fight abuses in the debt collection market.”





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CFLA was founded by the Nation's Leading Foreclosure Defense Attorneys back in 2007 to serve the Foreclosure Defense Industry and fight pervasive Bank Fraud. Since opening our virtual doors, CFLA has rapidly expanded to become the premier online legal destination for small businesses and consumers. But as the company continues to grow, we're careful to hold true to our original vision. For us, putting the law within reach of millions of people is more than just a novel idea—it's the founding principle, just ask Andrew P. Lehman, J.D.. With convenient locations in Houston and Los Angeles, you can contact Our National Account Specialist and General Manager / Member Damion W. Emholtz at 888-758-2352 for a free Mortgage Fraud Analysis or to obtain samples of work product, including cutting edge Bloomberg Securitization Audits, Litigation Support, Quiet Title Packages, and for more information about our Nationally Accredited and U.S. Department of Education Approved "Mortgage Securitization Analyst Training Certification" Classes (3 days) 24 hours for approved CLE & MCLE Credit (Now Available Online).

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