Where in the Regs Does It Say Banks Can Pocket the Difference?

This bank owes $31.5 million in customer refunds and fines because it didn’t bother to clear up mistakes on customer deposits.

Citizens Bank is in hot water for allegedly failing to credit customers’ accounts for the full amounts of deposited funds.

Over a five-year time frame, the Pennsylvania-based bank pocketed an estimated $11 million from deposit discrepancies when receipts didn’t match the money that was transferred, according to the Consumer Financial Protection Bureau.

The CFPB, worked with the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency in assessing penalties and ordering customer redress from Citizens Bank for what CFPB director Richard Cordray called “shoddy practices that deprived consumers of money that was rightfully theirs when they made deposits into their checking and savings accounts.”

The action against Citizens Bank, formerly known as RBS Citizens Bank, and Citizens Financial Group, formerly known as RBS Citizens Financial Group, requires that the bank pay a total of $20.5 million in penalties and $11 million in refunds to affected account holders.

Similar to other banks, Citizens required consumers making deposits to fill out a deposit slip listing the check and cash amounts that were being deposited, plus a total. The customer then turned the slip and money over to the bank, and in turn received a receipt detailing the transaction.

“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,” the consent order states.

The FDIC said more than 475,000 personal and business accounts were undercredited between January 2008 and November 2013. Citizens Bank operates retail branches in nearly a dozen states.

Citizens Bank failed to notify customers when deposit discrepancies were found, did not correct deposits, and failed to accurately describe its process for resolving deposit discrepancies, according to the OCC.

“The bank’s practice was not to verify and correct deposit inaccuracies unless they were above the $25 or $50 threshold,” the CFPB explained. “Although some consumers benefited by this policy, others lost money that rightfully belonged to them.”

Wow. I’ve made errors on a bank deposit slip before, but in my experience, my bank’s employees find the errors immediately and go over them with me before completing my deposit. I’m guessing that most bank customers, including Citizens’ account holders, operate under the assumption that their bank is checking for discrepancies between their deposit slip and the actual funds that are being deposited.

What do you think about the actions of Citizens Bank? Share your comments below or on our Facebook page.

Stacy Johnson

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