Citibank Must Pay Back The $14 Million It Stole From Customers Over A Decade

Between 1992 and 2003, Citibank operated an “automatic sweeping” program that would without notice remove positive balances from customers’ credit card accounts—mainly those of the poor and the recently deceased—and pocket the money. Now it’s paying back $14 million dollars to the affected customers, plus another $3.5 million in penalties to California, thanks to that state’s Attorney General.

From the Associated Press:

Citigroup’s “account sweeping program” automatically removed positive balances from customers’ credit card accounts, Attorney General Edmund G. Brown Jr. said. For instance, if a customer double-paid a bill by mistake or refunded a purchase for credit, that positive balance was then taken from the customer without notification, Brown said.

The news stories that announced the settlement last week don’t explain why the sweeping program was set up in the first place, or why it ran for so long. They do point out, however, that a whistleblower brought the program to the attention of an internal audit team in 2001, but that person was ignored and later fired.

One unnamed Citibank executive explains Citibank’s position pretty succintly in the AG’s press release:

In the words of a Citibank executive, “Stealing from our customers is a business decision, not a legal decision.” The same executive later said that the sweep program could not be stopped because it would reduce the executive bonus pool.

Citibank says it admits to no wrongdoing, although we’re not sure how you can characterize pocketing overpayments and credits for yourself as crime-free.

According to the settlement (PDF), Citibank must identify all affected accounts and mail a notice via first class mail to the account holder’s last known address, or to the person in charge of the customer’s estate. You’ll have to respond within 60 days of this notice, and then will be reimbursed the skimmed fees plus 10% interest. The bank has until June 1st, 2009 to refund the money.

“Citi pays $18M for questioned credit card practice” [Associated Press]
“Citibank Stole From 53,000 Customers” (Thanks to Claire!)
(Photo: Getty)


Edit Your Comment

  1. ironchef says:

    those bastards.

  2. blitzcat says:

    They make up to 15 years of interest on the money they stole and have to pay back only 10% above principle? What a great deal for citi!

  3. TheRealAbsurdist says:

    Go Jerry Brown!!

    Yes, THAT Jerry Brown.

  4. ohiomensch says:

    Is this one of those situations where, if the money is not claimed, CB gets to keep it anyway?

    • @ohiomensch: Nope. It looks like if the money isn’t claimed, it has to be turned over to that state’s unclaimed money department/office/whatever.

    • Oooh repayment with interest. I’m glad the settlement wasn’t something lame like “Free 0% for a year on a balance transfer.” I guess it’s easier when there’s an obvious monetary loss.

      @ohiomensch: No. It (probably) goes to the state:

      If Defendants do not receive a properly completed form within 60 days of mailing the Contact Letter, then Defendants shall escheat the amount to be refunded to the state of the customer’s last known address as reflected in Defendants’ records for the account. Defendants shall escheat these funds in accordance with the procedures established by that state’s unclaimed property and escheat laws.

    • ludwigk says:

      @ohiomensch: This is for credit cards, not bank accounts. So, say you charge $20 on your credit card this month, and accidentally send them $25.

      Citibank steals the extra $5 from you, and gives it to their executives. Great business decision.

      My first credit card was with MBNA, which, I discovered, would just float positive balances to next month. I was basically giving them a very insignificant interest-free loan until next month when it was applied to the balance.

  5. FrankReality says:

    Where are the other states’ AG’s and why aren’t they pursuing litigation?

  6. evslin says:

    In the words of a Citibank executive, “Stealing from our customers is a business decision, not a legal decision.” The same executive later said that the sweep program could not be stopped because it would reduce the executive bonus pool.



  7. Aisley says:

    “Stealing from our customers is a business decision, not a legal decision.” …the sweep program could not be stopped because it would reduce the executive bonus pool.”

    Man! I wonder if the “executive” had some tylenol, because his face must be hurting after saying something so criminal. In regards to not admiting wrongdoing, just because the criminal say he sees stars doesn’t make it night time.

  8. sketchy says:

    What possible reason could there be to skim off funds from an account with a positive balance…[crickets]…

  9. rellog says:

    So if many of the execs were privy to this information, why again aren’t they going to jail? If I knowingly kept money unlawfully from a bank, I’d be facing criminal charges…

  10. hc130radio says:

    And CitiBank is now in charge of the Gov’t travel program for the DoD as of 1Nov!

  11. wickedpixel says:

    In the words of a Citibank executive, “Stealing from our customers is a business decision, not a legal decision.” The same executive later said that the sweep program could not be stopped because it would reduce the executive bonus pool.

    Is this a real quote? I had to double-check and make sure I wasn’t reading the onion.

    • mythago says:

      @wickedpixel: Yes, it is a real quote. As a lawyer whose work involves a fair amount of dealing with corporate types, it is unbelievable how many of them apparently had some kind of morality-ectomy in business school. Many simply don’t think that rules should apply to them: customers are dupes at best and the enemy most of the time, and their company should get to do whatever it likes to make money.

  12. iMe2 says:

    Promptly canceling my Citi card…

  13. henrygates says:

    They never admit wrongdoing. Just like everyone in prison is innocent.

    If you ask me, any corporation that is caught stealing or otherwise breaking basic laws should be dissolved. The $17.5 million they just gave up will be factored in to their next thieving business plan.

    • Jean-Baptiste Emanuel Zorg says:

      Becky Schafer steals $3.3 million from Citibank. Her punishment? 38 months in prison.
      Carlos Gomez steals $47 million from Citibank. his punishment? 55 months in prison.
      Ronald Fisher steals $14 million from Citibank. his punishment? 63 months in prison

      Citibank steals $14 million from their customers. Their punishment? They have to pay interest.

      I agree with henrygates: – corporations that commit serious crimes should be dissolved. A mob of six million shareholders screaming for the heads of the company executives whoese malfeasance made their stocks worthless will most certainly get some of the scumbags put in jail, and will hopefully make some of the others at least think twice.

  14. BiZarRroBALlmeR says:

    I canceled Citi a long time ago. Bad experiences. Amex has been better.

  15. parrotuya says:

    When I worked for Citibank years ago, I was very underpaid. Maybe they used a ‘sweeping program’ to reduce my wages?! Citibank is EVIL!

  16. Snarkysnake says:

    Here , just let me zip up my asbestos polyester leisure suit so that I can survive the flaming that I am going to get…Okay, ready.

    There is a small glimmer of hope inside me that whomever is elected in November will bring the pain to these big companies that think that they are above the law.I mean, use the full power of the federal government to punish,and I mean really punish these people so that they will think twice before pulling this shit,bonus or no bonus.The penalty here should have been triple damages PLUS interest with no wiggle room. The poor bastard that got fired for blowing the whistle should get some serious coin for being fired. Only when it is more painful to break the law than do the right thing (like it is for us poor schlepps in the real world), will these people do whats fair.

    • doctor_cos wants you to remain calm says:

      @Snarkysnake: Sorry, McBama will not ease your pain. Both of these folks were bought and paid for long ago.
      Bills in congress to prevent this kind of thing, and other thuggery by banks die on the vine, as these ‘representatives’ know where their real money comes from.

      What does the federal gubbamint (OCC) do in cases like these? What does the OCC do PERIOD except stop states from going after banks, as that is the purview of the OCC (to sit by and laugh along with the CEOs).

      • JollyJumjuck says:

        @doctor_cos: The way I see it, you have two options. 1) Take it, or 2) Get in on the action. Politicians will never stop these corporations, and people are too frightened/pacified to rise up in a massive riot. Sure, you can take your money elsewhere, but how do you know the next company isn’t going to pad their pockets at your expense down the road?

  17. jadenton says:

    The fact that they can get off for 10% interest plus fees to cover the state’s cost of litigation is an outrage. This was theft and conspiracy to theft. It was not done by some abstract corporation, but by a group of men and women who made a decision to abuse their position of trust for their own profit. Those people should do hard time.

    And the shareholders should sue them for the damages their shares incurred when they got caught.

  18. Tijil says:

    I’m wondering why there are no criminal charges against the individuals responsible for this multi-million-dollar theft, and why there are no punitive damages being sought from the corporation – and possibly any auditors involved over the years.

  19. Difdi says:

    Somehow, I suspect that “Stealing from our customers is a business decision, not a legal decision.” would not be accepted as a valid excuse by Citibank, if given by someone who steals from them.

    Citibank steals millions of dollars, and they just have to give it back. If a citizen were to steal $1 from Citibank, how hard would Citibank come down on the poor fool?

  20. DH405 says:

    If a large corp uses fraud to steal from customers, they should have to pay back 10x the amount stolen. They should have to actually FEEL the punishment.

    If I had no morals, and it appears they don’t, I’d make this decision many times over. Being able to take millions and only have a small chance of being caught, and even then the repercussions are minor.. yeah, seems like a solid business plan.

    Also, the whistle blower should get a payoff from this deal, too.

  21. TMurphy says:

    I also support hard time for these thieves.

  22. tripnman says:

    That’s it… I’m marching my ass downtown and getting my shit incorporated. Then my non-person entity and I can enjoy screwing over all the little people we meet, ignoring laws and having a ball while my fat cat CEO buddies and I drink martinis made with the sweat of the working man. Good times.

  23. azntg says:

    A long joke that I tell my friends sometimes:

    “Smart would-be thieves should take notice… if you want to illegally steal money from people off the street, establish a major corporation and do your bidding from there. Why? Even if you get caught, you’ll just get away with a slap on the wrist! Small fine and maybe a brief media attention. Do it as an individual, you’ll face hard time and be stripped of any dignity for life.”

    The bastards behind this fraud are definitely getting off easy. Hard time AT THEIR EXPENSE (can’t let them fraud the public twice!)

  24. North of 49 says:

    “we stole from our customers for years and all we have to do is pay some of them back, even though its a bit more. Oh woah is us. Here… take my wrist and slap it!”

  25. gatewaytoheaven says:

    I wish I had Citicard to cancel right now.

  26. brent_r says:

    Simply put, these folks are criminals.

  27. crazyasianman says:

    The jerks who cooked up that idea should have their testicles forcibly removed using spoons. to think I once almost applied for a job working under under the citi umbrella. glad I decided otherwise.

  28. Marshfield says:

    should be sending many executives to federal pound-you-in-the-ass-prison.

    One count of theft for EVERY time they took money from any account.

    Isaiah 5:20 “Woe to those who call evil good, and good evil; Who substitute darkness for light and light for darkness; Who substitute bitter for sweet and sweet for bitter!”

  29. Xkeeper says:

    Wow, I sure wish I could steal money and only get a slap on the wrist for it.

    This is disgusting. Why the hell aren’t they being sent to prison?

  30. ageshin says:

    This stuff is not new. It was perfected in Vegas by the Mafia, and the practice is called ‘skiming’. In every way the modern banking system is showing us that the Mafia are pikers. I like the bit about taking money from their clients, a mater of policy and not law. I wonder if the same claim would work for your run of the mill bank robber?

  31. brokeincollege says:

    If a corporation fraudulently steals from its customers/investors/employees, the top 10 highest ranking executives should be thrown in prison for a month per dollar stolen. And the fine for the corporation should be $5,000 per dollar stolen.

    I find this absolutely disgusting. But I find Chase and BoA even MORE disgusting, so that’s the reason I’m not taking all my deposits out.

  32. bluewyvern says:

    Yeah, about that interest. I hope it’s 10% annual, not total. And compounded.

  33. bigvicproton says:

    sound’s like superman two

  34. shoegazer says:

    Yes, it’s probably 10% APY.

    I had a settlement go my way with regards to mortgage protection payments (even the name sounds Mob-worthy) and the bank is repaying my principal plus 8% “simple” interest per annum.

    That means my first payment earns 8% per year for the 5 years that have elapsed, my thirteenth earns 8% for 4 years, etc.

    I’m still waiting for the bank to confirm my big fat check though.

  35. Red_Eye says:

    Every one of the rat bastards who knew of this at Citi should be tried for Grand Larceny or accomplice to it. If I ROB you of the same amount of funds I get charged with a Felony.

  36. I_Spy says:

    I wonder how much of this settlement has to do with the fact that Citibank is now the US Government’s Official Travel Card (as of 30 November). A lot of people overpay their accounts and run a positive balance on their travel cards since being in default by even $0.01 on your travel card will alert multiple layers of supervisors; especially in the military.

  37. It’s comical the things some companies do, no reasonable person would EVER think this is legitimate but they do it anyway. Ridiculous…

  38. vastrightwing says:

    Thank God only Citi Bank was doing this!

  39. Ben Popken says:

    Holy crap.

  40. Apeweek says:

    Dang! I wondered why my Citibank account never balanced in Quicken…

  41. SkokieGuy says:

    Isn’t this what the RICO laws are for? This is an organized crime conspiracy.

    Jail time is warranted.

  42. blackmage439 says:

    And, yet again, thanks goes to the Consumerist for pointing this out. Thanks to you fine fellas (and gals), I will not be had by Citi’s underhanded tactics. I would only bank with these bastards out of necessity, or a psychotically beneficial interest rate.

  43. bravo369 says:

    Sometimes i wonder whether businesses were just more honest decades ago or whether we just never found out about it. Thank god for the internet and places like consumerist.

  44. organicgardener says:

    “Stealing from our customers is a business decision, not a legal decision.” WTF? He actually said that? What a bunch of rotten bastards!

  45. singularity823 says:

    Crappy 80’s music video, but I think I just found Citibank’s coporate theme song:

    If only I knew that getting a MBA is like having a monopoly “Get out of jail” free card I might have switched majors.

  46. thebluepill says:

    Damn.. Citi Should be made to Pay the APR for Positive Balances on their cards.

  47. randombob says:

    I sent in a notice to Consumerist that was ran a while back about Armed Forces Bank Visa doing this very thing to me (& I think a Citibank peep was grouped into the same post as well).

    Wonder if I can push the issue with a copy of this at hand, get my 85¢ back


    NIce to see little steps in the right direction, though! Go California!

  48. aerick79 says:

    My question is that, how long has the credit has been on the account? It would be Different if the credit has been on there for like 5 years or so. Then its ok to remove and pocket the cash. The cardholder, gets montly statements about the credit.

    • m4ximusprim3 says:

      @aerick79: Umm, what? so how long do I have to let my 401k sit before fidelity can pocket it? 50 years? 60 years?

      If you own an account, you OWN it. Your debt on that account is money you OWE, and your credits on that account are money you OWN.

  49. xmarkd400x says:

    Too bad Citibank made money on the deal.

    Figure a savings account where they put the stolen money got 5% interest. Contributing 1.4m/yr for 10 years will get you 18.4m.

    Subtract the 17.5m they had to pay back, and they got a cool $900,000.

  50. BrianDaBrain says:

    I new feel very cool for having declined a recent offer for a Citi credit card. And by “declined”, I mean “shredded into itsy-bitsy pieces”. How exactly did this go on for so long? Is it possible that people actually had no idea that they had a credit balance, so didn’t notice when Citi “skimmed” it? Or (more likely) did they get some runaround BS answer when they called to ask about it? Why didn’t somebody sue them sooner???

  51. Hands says:

    “Stealing from our customers is a business decision, not a legal decision.”

    Whatever prompted the decision, the use of the word “stealing” sounds like a confession to criminal activity.

    • doctor_cos wants you to remain calm says:

      @Hands: Damn, I want to change my screen name to Sipowicz.

      And I hate to say this, but as much as I would agree with dissolving the company, what happens to all the shares and shareholders? Not all of them are rich ba$tards…

  52. Trai_Dep says:

    Note that this case came to light both because of Whistle Blower laws and those darned Trial Lawyers, the bugaboos of a certain political faction that will go nameless because I don’t want to rehash any tired arguments thereof. And won’t.

    If corporations are legal entities similar to people, with rights, etc., which they are, we really need new laws that allow us to “jail” errant corporations. I’m unsure how: suspend their Corporate Charter for [x] period of time? Freeze their ability to pay shareholders for [x] period of time (harsh on the shareholders but BOY would it deliver a smack-down on their share price)… Something like that?

  53. mariospants says:

    Likely this system waited and if there was no account activity in 3 months it took the money. Let’s just say they probably rationalized it this way: we’re not a bank, so if you don’t spend the money, consider it a cost of doing business.

    Years ago, my mom had overpaid $800 on one of her credit cards (MasterCard) and it was practically a legal battle to get her money back from them. They’re predatory that way.

  54. IC18 says:

    Sneaky stealing bastards, cancelling my Citi card. People who steal from the poor have no business in my book.

  55. temporaryerror says:

    Citigroup is also responsible for Primerica, the “financial planning” group that tries to put your finances in the hands of people such as myself with just a couple of months of training. (and I have NO business handling other peoples complicated financial matters…) They called me and tried to get me “on board” after seeing my resume on monster looking for a photography/design position…

  56. livinyo says:

    Here’s how I imagine it went down…

    Citibank: Um, the 7-Eleven, right? You take a penny from the tray.
    California Attorney General: From the crippled children? The poor and deceased?
    Citibank: No, that’s the credit card jar. I’m talking about the tray, the pennies for our executives.

  57. JustaConsumer says:

    AT&T did this to me. Just ate my positive balance even though it was their fault I had a balance. They had a great euphemism for it. Needless to say, they did not give it back and I no longer use American Telephone and Telegraph – will they still help you with a telegraph?

  58. TACP says:

    Why did they stop in 2003? I guess Richard Pryor retired from programming.

  59. tocontactbrian says:

    Chase credit card has done this to me twice. I had a rewards card and after paying off the balance I ended up with a few dollars extra. I didn’t use the card anymore and after about three years they took the money and reduced my balance to $0. An automatic magazine subscription made a charge to this card again and I paid off the balance. I ended up with a few cents this time. After only a year they took the balance again. I did send this into the Consumerist several years back when it first happened but didn’t pursue it with Chase because it was only a few dollars total. Glad to hear Citibank got caught. Maybe Chase will too soon and I will get my money back.

  60. WraithSama says:

    Bear in mind that the executive stated that the money that was stolen went to increasing the executive bonus pool. In other words, the executives kept that stolen money for themselves. The penalties that are going to be repaid to the people who were stolen from will come out of the company’s coffers, not the executives. In other words, the executives stole the money and got off scott-free. This punishment isn’t even a punishment. The company is going to be the pariah for their blatant thievery.

  61. WillowAugeas says:

    This is a complete deception and lies. Each CEO and account excecutive
    should have been imprisoned to 15 years in federal prison. Second, Citibank
    should have undergone a thorough credit background and computer check by the
    FBI to ensure no further criminal activity could have occurred. And last
    Citibank should have been required to pay a $50 million dollar fine for
    their actions. Citibank needs to made an example of so other banks do not
    ever consider to do this unethical practice.

    Lastly, Congress must legislate a bureau that can oversee these banks and
    the ethics of their practices to protect the American public.

    This is theft and in America theft is punishable under law.

  62. AlphaBitchSoup says:

    Jail time for the executives who ran this scheme. It’s the only thing that works. If they had stolen from the company, they would see the inside of a jail, so why not this? That penalty doesn’t seem anywhere near high enough, unless it is coming from the pockets of those who participated in the theft.

    On months that I don’t use my CC I always keep a small positive balance so that I still get a statement. It’s my money and any bank who stole it would be hearing from me, then the media and the police. How is it that this bank has any customers left?

  63. 138webster says:

    Such deception. I am very shocked that this story is not in newspaper headlines and on CNN. How come they don’t publicize this kind of stuff to show consumers the real colors of these mischievous corporations who just care about profit and not their customers!

  64. cdog says:

    Does anyone know anything about a judgement against Citibank’s Citiassist loans where they apparently paid college financial guidance officers kick backs for the number of C.A. loans they issued? I know I read about this and I want to see if my wife’s college is on the list. I believe some debts were forgiven. Thank YOU