Bank Busted for Skimming from the Dead

For
more than a decade, a giant American bank secretly employed a bold policy for relating to its customers: Stealing from them. Citigroup, the largest bank in the U.S., recently confessed that it stole more than $14 million from its own customers between 1992 and 2003.

In an agreement with the California attorney general’s office, Citi agreed to pay an $18-million settlement, including a $3.5-million fine and refunds to the 53,000 victims. Of course, re-paying victims will prove difficult because in many cases, Citigroup stole from the recently deceased, according to a statement from California Attorney General Edmund G. Brown, Jr.

The bank pulled off its heist using a computerized "credit sweep," a common industry practice of removing old customers from bank computer systems. The affected consumers were in recovery status, which most often applies to people who have died, but also to those who file for bankruptcy, face collection, or are being sued by the bank.

But Citigroup took this hum-drum, back-office task and made it nefarious. If any customers in recovery accidentally double-paid a bill, or died soon after a returned purchase was credited to their account, Citigroup’s computer program stole the money, moving it from the customer’s account into the bank’s own general fund.

The bank tried to hide its thievery for as long as possible. When one of its employees complained about the practice to the company’s lawyers, his boss told him, "Stealing from our customers is a business decision, not a legal decision." The employee was later fired.

"The company knowingly stole from its customers, mostly poor people and the recently deceased, when it designed and implemented the sweeps," Brown said in his release. "When a whistleblower uncovered the scam and brought it to his superiors, they buried the information and continued the illegal practice."

Tagged as: $14 million, 000 victims, 53, bankruptcy, California attorney general, citigroup, collections, credit sweep, Jr., Settlement Edmund G. Brown, whistleblower

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