
Citi to Refund $330M to Credit Card Customers It Overcharged - uptown
https://www.nytimes.com/2018/02/23/business/citigroup-credit-card-refunds.html
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mabbo
> it caught the error in a routine internal review mandated under federal law

Ladies and gentlemen, this is what regulations are all about. If not for a
federal law forcing Citi to audit for this sort of thing they would either
never have caught that they stole hundreds of millions of dollars, or more
likely just never have reported it to anyone.

The next time some politician tells you regulations are always bad, only lead
to more expenses for customers, remember this.

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conanbatt
What has been the cost of this regulation as a whole on the entire banking
industry?

Lets get that number and compare.

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jhwang5
wait, so suppose regulation costs financial firms too much, you'd rather have
no recourse to getting reimbursed as an individual?

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jack_h
I'm guessing the argument is that if the cost that the customer bears for such
regulated audits is greater than the refund they get from it then the customer
actually lost money.

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chillwaves
That sounds kind of like me complaining about the cost of my car insurance
because for 10 years I didn't have any accidents.

Seems difficult to know the benefit of such regulation without hindsight.

Secondly, businesses face market pressures to provide low cost to customers
(isn't that the whole argument for the free market?) therefore passing the
cost to the customer should be weighed against other potential inefficiencies
-- they might even have to take a smaller cut of profit!

Funny how so many people can never justify the cost of doing business when it
comes to protecting consumers.

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nivla
I find it interesting how this show up the day after I had to call the
customer service to clarify an interest fee on my account that din't make
sense. So here is what happened, I got hit with a $12.xx monthly interest on a
$2000ish purchase which I made less than 30 days ago and hasn't shown up on my
previous statement. For clarification, my current APR on the card is 5.99%.

It took me two reps and two accounts managers to learn how these things are
calculated:

1) Interests are daily compounded.

2) Interests are not calculated on actual balance but on the average daily
balance.

3) If you don't pay your statement balance in full by the end of the month,
you lose your grace period for future purchases and interest would start
accruing as soon as the transactions goes through. To reset this it would
require you to make two full statement payments in a row.

4) If you purchase something and return it and the return takes a few days to
process, you would still pay interest on for those days.

The rep and the first account manager that spoke to weirdly dint have the
basic understanding of interest rates. She argued that the $12 interest was on
the $2000 for 4 days at the rate of 5.99%. Funny enough, she still din't find
anything odd when I pointed out that it would mean, by the end of the year, I
would pay $1095 ie. > 50% of the principal in interest!

Anyways the second rep was knowledgeable enough to explain it.

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jjeaff
Is this for a US based credits card? I have never heard of needing pay off for
two full months. Or for the average daily balance used in calculation and I'm
pretty sure neither is the case for any of my cards. But I will need to check.

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donarb
I suppose one good thing in this is that Citi caught this error on its own and
not as a result of a class action suit. So customers will receive the full
value of their overpayment, rather than a puny voucher dictated by a court
where a large chunk goes to the lawyers bringing suit.

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bgirard
So say that a customer was overcharged $100 in interest in Jan 2017 and they
carried a balance all year. By Dec 2017 they carried an extra $100 on their
credit card balance needlessly so they paid >$20 in additional interest (APR
20%) due to this overcharge.

The article only mentions returning the original amount AFAIK so it looks like
Citi might still be profiting from this error.

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san_dimitri
servers right. well said mabbo >The next time some politician tells you
regulations are always bad, only lead to more expenses for customers, remember
this.

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snambi
I always suspected their credit card bills. It was very confusing and very
hard to verify. May be they did it intentionally? who knows?

