The Consumer Financial Protection Bureau yesterday entered into a consent order with Citibank after accusing the lender of student loan servicing “failures that harmed borrowers.”
As part of the consent order, Citibank will pay $3.75 million back to consumers and a fine of $2.75 million.
Among the accusations made against Citibank by the CFPB are:
- Misleading borrowers into believing that they were not eligible for a valuable tax deduction on interest paid on certain student loans
- Incorrectly charging late fees and adding interest to the student loan balances of borrowers who were still in school and eligible to defer their loan payments
- Misleading consumers about how much they had to pay in their monthly bills
- Failing to disclose required information after denying borrowers’ requests to release loan cosigners
A copy of the consent order can be downloaded here.
Many of the items addressed in this consent order were part of a 2015 consent order that the bureau entered into with Discover Financial Services as a result of loans that the lender acquired from Citibank. The consent order also addresses items that the bureau had raised in a consumer warning advisory it issued earlier this year.
“Citibank’s servicing failures made it more costly and confusing for borrowers trying to pay back their student loans,” said CFPB Director Richard Cordray in a statement. “We are ordering Citibank to fix its servicing problems and provide redress to borrowers who were harmed.”