On August 12, 2015, the CFPB, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) took action against Citizens Bank for failing to credit consumers the full amounts of their deposited funds. As a result of the bank's unfair practices in connection with deposit processing, the CFPB ordered the bank to pay approximately $11 million in refunds to consumers and a $7.5 million penalty for the violations. The bank's board must also establish a compliance committee to monitor and coordinate the bank's adherence to the CFPB's order.
From January 1, 2008 to November 30, 2013, the CFPB found that the bank had violated the Dodd-Frank Wall Street Reform and Consumer Protection Act's prohibitions on unfair and deceptive practices by failing to properly credit consumers' checking and savings accounts. If the bank's scanner misread the deposit slip or the checks, or if the total on the deposit slip did not equal the total of the actual checks, the bank took no action to fix the mistake if it fell below a certain dollar amount. By ignoring these discrepancies, the bank withheld millions of dollars from consumers.
Citizens Bank failed to credit consumers the full amount of their deposits when the amount scanned on the deposit slip was less than the amount of the checks and cash deposited. The bank would credit the consumer's account with what was read on the deposit slip rather than the actual sum of money the consumer transferred into the bank. 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. Below those thresholds, the bank would credit the amount on the deposit slip and retain the remainder of the deposited amount.
The bank used an Enterprise Transaction System (ETS) for processing deposits. Generally, the bank would require consumers making a deposit to present the deposit items, along with a deposit slip on which the customer indicated the total amount being deposited. The bank would then provide the consumer with a receipt for the transaction reflecting the amount stated on the deposit slip. ETS would flag discrepancies between the deposit slips and the total amounts read from the deposit items. Only when the discrepancy exceeded a certain amount would the bank review the transaction.
Finally, the CFPB found that the bank falsely claimed that it would verify deposits. The bank did not clarify to consumers that it would take steps to verify and correct deposit inaccuracies only when the discrepancy was above the threshold.
The FDIC separately ordered Citizens Bank of Pennsylvania to pay restitution and a $3 million civil penalty. The OCC separately ordered Citizens Bank, N.A. to pay restitution and a $10 million civil penalty. In total, Citizens Bank must pay $11 million in consumer refunds and $20.5 million in federal penalties for these coordinated actions.