CFPB orders Citibank to pay $6.5M for alleged student loan servicing failures

This story appeared in Bank Digest. 

Charging Citibank, N.A., with deceiving student borrowers about tax benefits, incorrectly charging late fees and interest, and sending misleading monthly bills and incomplete notices, the Consumer Financial Protection Bureau has ordered the bank to end its allegedly illegal servicing practices and pay $3.75 million in redress to consumers and a $2.75 million civil money penalty. Citibank consented to the order without admitting or denying the Bureau's findings.

"Citibank's servicing failures made it more costly and confusing for borrowers trying to pay back their student loans," said CFPB Director Richard Cordray. "We are ordering Citibank to fix its servicing problems and provide redress to borrowers who were harmed."