Citigroup Settles Allegations of Credit Card Skimming

Citigroup Inc. has reached an agreement with California Attorney General Edmund G. Brown, Jr. to settle allegations that the company engaged in the illegal practice of "sweeping" positive balances from Citibank customers' credit card accounts. Under the settlement agreement, Citigroup will pay out more than $18 million in customer refunds and civil penalties.

A News Release from the California Office of the Attorney General states that Citigroup's practices netted the company more than $14 million from over 53,000 customers nationwide. Using a computerized "account sweeping" program, Citibank customers' positive credit card balances were allegedly funneled from customer accounts into the bank's general fund. Under terms of the settlement, Citibank will refund all "swept" funds to affected customers nationwide, and will pay $3.5M a civil penalty to the State of California.

According to CNNMoney.com, Citigroup Inc. "takes issue" with the California Attorney General's characterization of the company's conduct and the state's allegations of foul play.

• California Attorney General's Announcement of Settlement with Citigroup
• Read the Stipulated Final Judgment [PDF file]
• Reuters: Citigroup to Pay $18M Over Credit Card Practice
• CNNMoney.com: Citi 'Takes Issue' With Calif. AG Statement on Credit Card Probe
• Shopping for Credit Cards (FindLaw)
• Consumer Credit: Credit Cards (FindLaw)