Citizens Bank to Pay $18.5 Million for Failing to Credit Full Deposit Amounts

Citizens Bank will pay $18.5 million for failing to credit consumers the full amounts of their deposited funds.

The bank kept money from deposit discrepancies when receipts did not match actual money transferred.

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The Consumer Financial Protection Bureau (CFPB) consent order requires the bank to provide approximately $11 million in refunds to consumers and pay a $7.5 million penalty for the violations.

“Citizens Bank regularly denied customers the full credits of their deposits when there were discrepancies between deposit slips and the actual money transferred into the bank,” said CFPB Director Richard Cordray. “The bank chose to ignore these discrepancies and harmed many consumers by pocketing the difference.”

The bank operates retail branches in about a dozen states and among its various products and services are deposit accounts.

For the period at issue, the bank generally required its customers making a deposit to fill out a slip listing the checks or cash being deposited, and their total. The customer then turned the deposit slip over to the bank and got a receipt reflecting the amount on the deposit slip for the transaction. The bank scanned the deposit slip and deposit items at a central location.

The CFPB investigation found that from January 1, 2008 to November 30, 2013, Citizens Bank violated the Dodd-Frank Wall Street Reform and Consumer Protection Act’s prohibition on unfair and deceptive practices by failing to properly credit consumers’ checking and savings accounts. In cases where the bank’s scanner misread either the deposit slip or the checks, or if the total on the deposit slip did not equal the total of the actual checks, Citizens Bank did not take action to fix the mistake if it fell below a certain dollar amount.

Over the years, by ignoring the discrepancies the bank shorted consumers millions of dollars. Specifically, Citizens Bank failed to credit consumers the full amount of their deposits: Citizens Bank frequently did not give consumers full credit for their deposits when the amount scanned on the deposit slip was less than the amount of the checks and cash deposited. The bank credited the consumer’s account with what was read on the deposit slip, not the actual sum of money the consumer transferred into the bank. Citizens only investigated and fixed errors when they were above a certain threshold.

From January 2008 to September 2012, the bank only looked into discrepancies greater than $50.

From September 2012 to November 2013, the bank only looked into discrepancies greater than $25.

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