Citibank Allegedly Used Illegal Debt Collection Methods, Hit with Massive Fine

Citibank was recently fined $8 million for not doing enough to stop illegal debt collection practices. The total fine includes an order to pay back $5 million to wronged customers, as well as an additional $3 million in penalties.

According to a report issued by the Consumer Finance Protection Bureau, Citibank “subjected consumers to collection efforts from debt buyers after they had already, in reality, paid off their accounts.”

A major source of the problem was that Citibank reportedly “delayed the updating of account balances.” As a result, debt collectors did not necessarily realize that the individuals they were hounding for payment had already paid back the debts.

The debt collectors were not affiliated with Citibank. Rather, they were employed by collection agencies that had purchased the debts, at a discount, from Citibank. It is often the case that major credit card companies will write off certain debts when they deem a particular customer unlikely to ever pay back the balance that is owed. The credit card company then sells the debt to a collection agency, which will continue seeking payment of the balance owed – often with interest.

Debt collection agencies are bound by certain rules of fairness and reasonableness. However, some debt collectors will still go to great lengths to get payment, often resulting in a great deal of stress for the people they are calling. That’s why it is so important for companies like Citibank to make sure that their records are properly updated and that no one who has actually paid their debt gets bothered by a collection agency.

In the case of the Citibank debts, many clients who owed money paid off their balances a short time after the bank sold their debts. This resulted in a great deal of confusion when the bank failed to update their records and promptly forward notification of the payments to the collection agencies.

For additional information about this case, view the article, “Citibank Will Pay $8 Million for Illegal Debt Collection Practices.”


If you are dealing with debt management issues, whether that includes exploring the possibility of filing for bankruptcy or seeking some other form of debt relief, you should talk to a qualified debt relief and bankruptcy attorney. Joel R. Spivack is an experienced bankruptcy lawyer who will make sure your assets remain protected and that you are not harassed by creditors. Contact Mr. Spivack today to schedule a free consultation and explore your options.

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Attorney Joel R. Spivack is an experienced bankruptcy and residential real estate transactions lawyer in Cherry Hill, New Jersey. Clients come to us for legal services, but what we really provide is peace of mind. For more than 30 years, Attorney Spivack has helped people make wise, informed decisions about bankruptcy filings, debt relief options and residential real estate transactions.
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