Citibank has agreed to pay about $5 million to settle charges that it took money from Californians' credit card accounts through an illegal account "sweeping" program, the state attorney general said Tuesday.
Attorney General Jerry Brown said the big New York bank used a computerized process to automatically remove positive or "credit" balances from cardholders' accounts. Such balances occur if a customer returns a purchased item or mistakenly overpays a monthly bill.
Under a settlement filed in Sacramento Superior Court, Citi agreed to refund about $1.6 million to California customers, with interest, plus pay the state $3.5 million in penalties, Brown's office said.
"The company knowingly stole from its customers, mostly poor people and the recently deceased, when it designed and implemented the sweeps," Brown said in a press release. The practice ran from 1992 to 2003.
In the settlement, Citibank made no admission of wrongdoing. And the bank, in a statement Tuesday, said Brown was overstating the case.
"The attorney general's characterization of our conduct and the parties' voluntary settlement is not accurate," the bank said. "We of course are committed to treating our customers fairly, and we voluntarily ended the computer process at issue on our own in 2003."
Brown said the $1.6 million taken from Californians' accounts was just a fraction of the $14 million Citibank took from customers nationwide. The settlement announced Tuesday only affects Californians, although Citibank said it has been "refunding credit balances voluntarily to customers nationwide."
Call The Bee's Dale Kasler, (916) 321-1066.
