The Office of the Attorney General has settled its three-year investigation into CitiBank's handling of customer over-payments and refunds, securing refunds for 53,000 affected CitiBank creditcard holders nationwide. It turns out that, instead of crediting returns or over-payments to accounts turned over for "recovery," Citibank was moving the money to its company coffers... reportedly for use as executive bonuses.
This news--"Bank Robs Customers!"--has many strange implications.
First, it raises the question of whether other credit card companies are doing the same. We know from a report released Tuesday by the Federal Deposit Insurance Corp. that 117 banks and thrifts are considered to be "in trouble" in the second quarter of 2008. That's up from 90 in the prior quarter, and is the biggest tally since mid-2003. (No specific banks were identified by the FDIC.)
Second, it begs the question of how dead and bankrupt people had credits in their accounts. The percent must be tiny, which indicates that the total amount of consumers who've had their credit card payments move to "recovery" must be astronomical. Think about the implications this could have on the strength of the credit market and the strength of stocks in financial companies. Indeed, financial stocks fell 1 percent on this news, making it Tuesday's largest stock-market-sector loss. Ironically, CitiGroup's stock continued going up.
Third, it's a reminder to check in on your own credit card accounts. If you were late on a CitiGroup credit-card payment from 1992 to 2003, you may be due a refund.
Fourth, check on the credit card accounts of your loved ones who can't check for themselves. If they can no longer manage an account, then it's time to close it. Late fees and subsequent over-limit fees add up quickly. There's no sense giving the credit card companies any more than they already take.
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| Jennifer D. Meacham, Gather Money Correspondent | ||||
Jennifer's column, "The Bottom Line," is published every week to the Gather Essentials: Money channel. Jennifer is a business and personal finance columnist who regularly covers money matters for RedwoodAge.com, online selling/marketing strategies for Practical Ecommerce magazine, and self-directed real estate investing for RIS Media. She co-authored the best-selling retirement investing guide "IRA Wealth: Revolutionary IRA Strategies for Real Estate Investment" (Square One Publishers, New York). Keep up on the latest news and analysis into how you can take control of your business and personal financial future by joining Jennifer's "Self-Directed Investing 101" network. | ||||
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Comments: 21
Recently deceased people can get a credit balance on a charge card when a service that has an automatic monthly charge (like netflix) is cancelled.
In their statement, I believe Citigroup said they stopped 'sweeping' accounts in 2002.
Also, don't take the number on the FDIC watch list too seriously. They raised the reserve requirement, efffectively moving the line. Banks that were fine are now on the watch list because of the rules change, not because of any change in their finances.
I get your Netflix example. But for this settlement, Netflix would have had to be billed, then cancelled, then granted a refund in order for the credit to have been "swept" into CitiBank coffers. If I'm dead, the last thing I'm going to be doing is asking Netflix for a refund.... ; )
I'll check in the last reported sweep dates again Pat. That's a good point to make, since if that's the case then the only statements to check are ones before 2002.
Take your pick....
Its time consuming, and takes a fair amount of organization to manage.
It would be very easy to lose track of a credit balance somewhere. Take a look at the lists of unclaimed funds for a state to get some idea of the scope.
With the advent of paperless accounts, I think this problem is going to get a lot bigger. Without the reminder of a statement its easy to overlook something.
With a little luck I may see $500 or possible more from an old savings bond my deceased husband had in the military and never claimed. Found it thru one of those sites.
The other thing I found was around $300 due to my son - a last paycheck that missed him when he moved.