Category Archives: Citibank

BofA Settles Overdraft fee case

Bank of America has agreed to pay $410 million dollars to settle a federal lawsuit alleging the company charged excessive overdraft fees against it customers. The law suit was a combination of several lawsuits filed in 14 different states, all consolidated into one federal case in Florida. Other banks involved in the suit were Wells Fargo and Citibank.

Consumers alleged the bank processed the payments in a way that caused more overdrafts.

Customers pay overdraft fees when they spend more money than remains in their accounts. The fees can reach $35 apiece. Before federal law changed this summer, banks frequently charged overdraft fees on numerous transactions in a single day.

Small Bank Appeal

While big banks like Bank of America, Wells Fargo, Citibank and others continue to attract more deposit in the fourth quarter, many American are suddenly moving their money to smaller banks out of principal.

General public anger over taxpayer bailouts and big bonuses is one reason. The other is that according to recent survey, the big banks are also becoming the least trust worthy banks. There’s also growing resentment about how many big banks are nickel-and-diming customers in tough economic times. Others were lured away by more attractive rates offered at local banks or credit union that the big boys could not match.

Untrustyworthy Banks

According to a New York Times article, the least trustworthy banks are, in the order of first to last:

Bank of America, Chase, Capital One, TD/Commerce, Fifth Third, Citibank, and in last place, HSBC.

The survey ranked 50 financial institutions in the United States by the percentage of each firm’s customers who agree with the statement: “My financial provider does what’s best for me, not just its own bottom line.” The results are based on a survey of about 4,500 consumers.

Among Bank of America customers, 33 percent agreed with the statement above, while 31 percent of Chase customers agreed, 29 percent of Capital One customers agreed, 28 percent of TD/Commerce Bank customers agreed, 27 percent of Fifth Third Bank customers agreed and 26 percent of Citibank customers agreed.

Among HSBC customers, only 16 percent said they agreed with the statement, the lowest customer advocacy score ever reported in the United States, down 10 percentage points from HSBC’s score last year and in line with other recent similar poor rankings of other HSBC units.

Wells Fargo/Wachovia, by contrast, did better than the other big banks. About 40 percent of its customers said they believed the bank does what is best for them, with Wachovia’s customers probably pulling up Wells Fargo’s ratings, Mr. Doyle said. Wachovia has generally done substantially better in the rankings than the other big banks.

Credit unions ranked much higher than the big banks, as they have in previous years, with 70 percent of credit union customers saying their financial institution puts their interests first.

Insurance firms, meanwhile, remained the highest rated firms for customer advocacy, with more than half of all customers rating their insurers high on customer advocacy and insurers representing two-thirds of the firms in the top half of the rankings. The ranking of investment firms, meanwhile, fell below banks for the first time since the rankings began. Investment firm rankings tend to fall when the market isn’t doing well, Mr. Doyle said.

Citibank Settlement

Citibank agreed to suspend its plan to charge fees on certain checking accounts with the New York Attorney General’s office. The fees would have affect over one million of its customers.

The settlement was reached after Citigroup failed to provide adequate disclosure of the fee increase and didn’t offer a free checking program long enough before implementing the charges.

The fees would have cost customer between $100 to $120 a year.

Account fees had become an increasing source of revenue for banks in recent years as loan losses piled up and customers cut down on their borrowing during the recession.

Citigroup was planning to charge customers fees ranging between $7.50 and $9.50 a month if combined balances in Citi accounts fell below $1,500. Customers were also facing per-check charges of between 50 cents and $1 after the first 10 checks written each month.

The fees were going to be applied to “EZ Checking” and “Access” checking accounts.

Customers who signed up for one of the free checking accounts between Jan. 1, 2009 and Nov. 5, 2009 will not have to pay fees through the end of the year. The per-check fees will be waived for customers until Jan. 31, 2011.

“EZ” checking customers who signed up for their accounts before Jan. 1, 2009 will also avoid the per-check fees.