Citizens Bank, N.A.
Documents in this case
- Complaint · · 12 p.
- Stipulation · · 12 p.
Case summary
On January 30, 2020, the Bureau filed a lawsuit against Citizens Bank, N.A. (Citizens), alleging violations of the Truth in Lending Act (TILA) and its implementing Regulation Z, including TILA provisions passed under the Fair Credit Billing Act (FCBA) and Credit Card Accountability Responsibility and Disclosure Act (CARD Act), as well as violations of the Consumer Financial Protection Act of 2010 (CFPA) due to its violations of TILA and Regulation Z. Specifically, the Bureau alleged that Citizens failed to: (1) reasonably investigate and appropriately resolve billing error notices and claims of unauthorized use by automatically denying such claims for failure to return a fraud affidavit; (2) credit consumers’ accounts for fees and finance charges when unauthorized use and billing errors occurred; (3) provide consumers with required acknowledgment and denial notices regarding billing error notices; and (4) disclose required credit counseling information to consumers when consumers called the toll-free number designated for such purpose. On May 23, 2023, the Bureau filed a proposed stipulated final judgment and order, which the court entered the same day. The order requires Citizens to pay a $9 million civil money penalty. It also imposes injunctive relief designed to prevent Citizens from violating the law in the future.
Complaint ()
PDF of this document (12 pages)
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UNITED STATES DISTRICT COURT DISTRICT OF RHODE ISLAND
Bureau of Consumer Financial Protection,
Plaintiff,
v.
Citizens Bank, N.A., Defendant.
Case No. ________________
COMPLAINT
The Bureau of Consumer Financial Protection (Bureau) brings this action against Defendant Citizens Bank, N.A. (Citizens or the Bank) and alleges the following: INTRODUCTION 1.
The Bureau brings this action under the Consumer Financial Protection Act of 2010 (CFPA), 12 U.S.C. §§ 5536(a), 5564(a), and the Truth in Lending Act (TILA), 15 U.S.C. §§ 1637, 1643, 1666, and its implementing Regulation Z, 12 C.F.R. Part 1026, for Citizens’s violations of TILA, Regulation Z, and the CFPA. 2.
At all times relevant to this Complaint, Citizens issued and serviced credit cards for consumers across the United States.
3.
While servicing credit cards, Citizens failed to reasonably investigate and appropriately resolve billing error notices and claims of unauthorized use, failed to properly credit consumers’ accounts when unauthorized use and billing errors occurred, and failed to provide credit counseling disclosures to consumers as required by Regulation Z.
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JURISDICTION AND VENUE 4.
This Court has subject matter jurisdiction over this action because it is brought under “Federal consumer financial law,” 12 U.S.C. § 5564(a), presents a federal question, 28 U.S.C. § 1331, and is brought by an agency of the United States, 28 U.S.C. § 1345.
5.
Venue is proper in this district because Citizens is located, resides, and is doing business here. 12 U.S.C. § 5564(f).
PLAINTIFF 6.
The Bureau is an independent agency of the United States Government. 12 U.S.C. § 5491(a). The Bureau is charged with enforcing Federal consumer financial laws. 12 U.S.C. §§ 5563, 5564.
7.
The Bureau is authorized to initiate federal district court proceedings in its own name and through its own attorneys to address violations of Federal consumer financial law, including TILA and the CFPA. 12 U.S.C. § 5564(a)-(b). DEFENDANT 8.
Citizens is a national banking association and a direct, wholly owned subsidiary of Citizens Financial Group, Inc., a bank holding company. Citizens and Citizens Financial Group, Inc. are headquartered in Providence, Rhode Island. 9.
Citizens is a “covered person” pursuant to 12 U.S.C. § 5481(6)(A) because it offers and provides consumer financial products or services as defined under the CFPA, 12 U.S.C. § 5481(5). Among other consumer financial products and services, Citizens extends credit to consumers primarily for personal, family, or household purposes, and services the loans it provides to consumers, including acquiring, purchasing, selling, brokering, or other extensions of credit. 12 U.S.C. § 5481(15)(A)(i). Case 1:20-cv-00044 Document 1 Filed 01/30/20 Page 2 of 12 PageID #: 2
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FACTS Billing Error Notices and Unauthorized Use Claims 10.
The Fair Credit Billing Act, enacted and incorporated into TILA in 1974, includes substantive protections for credit card users who have billing errors. 11.
In order to qualify as a billing error notice, a consumer’s communication to a creditor must: (1) be in writing; (2) be received by the creditor at the address specified on the periodic statement disclosures; (3) be received no later than 60 days after the creditor sent the first periodic statement reflecting the alleged billing error; (4) relate to specified categories of billing errors; (5) enable the creditor to identify the consumer’s name and account; and (6) to the extent possible, provide details about the alleged error and the reasons why the consumer believes it was an error. See 12 C.F.R. § 1026.13(a)-(b). If a consumer files a billing error notice, a creditor is required to investigate the alleged error, send certain notifications to the consumer, and refund any amount found in error as well as any related charges that accrued. See 12 C.F.R. § 1026.13(c), (e), and (f).
12.
TILA also contains protections for consumers who experience unauthorized use of their credit cards. TILA’s implementing Regulation Z defines unauthorized use as “the use of a credit card by a person, other than the cardholder, who does not have actual, implied, or apparent authority for such use, and from which the cardholder receives no benefit.” 12 C.F.R. § 1026.12(b)(1)(i). 13.
When a card issuer receives a claim of unauthorized use, it is required to investigate the claim and refund the amount in question and any related charges if unauthorized use occurred. However, card issuers do not have to provide written acknowledgment or notifications in response to an unauthorized use claim and the Case 1:20-cv-00044 Document 1 Filed 01/30/20 Page 3 of 12 PageID #: 3
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consumer refund provision allows consumers to be held liable for up to $50. 12 C.F.R. § 1026.12(b).
14.
A claim of unauthorized use may also constitute a billing error notice if it meets Regulation Z’s billing error notice requirements. Citizens Automatically Denied Claims Without an Affidavit
15.
Since at least 2010 through June 2015, in numerous instances, Citizens denied consumers’ unauthorized use claims and billing error notices because the consumers failed to return an affidavit required by the Bank (the Fraud Affidavit). 16.
Citizens’s process permitted Bank employees to require consumers to complete the Fraud Affidavit provided by the Bank, and automatically deny the claim if the consumer failed to do so.
17.
The Fraud Affidavit states, inter alia, that the consumer “agree[s] to appear as a witness in Court, and to testify to the fact stated in this Affidavit . . . .” The Fraud Affidavit requires notarization, and includes a notarization statement saying, “Subscribed and sworn . . . .”
18.
Due to the language used in the Fraud Affidavit described in Paragraph 17 and its notarization requirement, consumers’ signatures on the Fraud Affidavit were subject to the penalty of perjury.
19.
In numerous instances, Citizens automatically denied consumers’ billing error notices and unauthorized use claims because those consumers refused to or were unable to complete the Fraud Affidavit described in Paragraph 17.
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Citizens Failed to Refund Finance Charges and Fees on Billing Error Notices and Unauthorized Use Claims 20.
Since at least 2010 through December 2015, Citizens failed to consistently refund all charges, including finance charges and fees, when it resolved billing error notices or claims of unauthorized use in consumers’ favor. 21.
In many cases Citizens failed to refund the full amount due by either mistakenly calculating the amount of finance charges and fees based on the date the dispute was placed in its system of record, as opposed to when the dispute arose, or manually miscalculating finance charges and fees related to transactions that should have been refunded to consumers.
Citizens Failed to Notify Consumers About Claim Status
22.
Since at least 2010 through February 2016, when Citizens’s Credit Card Payment Operations Department received billing error notices, it did not consistently send each consumer a written acknowledgement of the claim within 30 days of the Bank’s receipt of the claim. Likewise, when the Bank conducted an investigation and found that no billing error had occurred, Citizens did not consistently send each consumer a written notice of denial within two complete billing cycles (or, in any event, no later than 90 days) after receiving the claim. Citizens Failed to Provide Credit Counseling Referrals 23.
Since at least February 2010 through November 2015, the Bank advised consumers to call a specific toll-free number at the Bank to obtain referrals to credit counseling organizations, but the Bank had no policies or procedures in place to ensure that its employees provided credit counseling information when consumers called the designated phone line.
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24.
When consumers called the toll-free number, they were routed based on the status of their accounts: consumers whose accounts were in good standing were routed to a general customer service department, and consumers whose accounts were delinquent were routed to the collections department. VIOLATIONS OF THE TRUTH IN LENDING ACT 25.
TILA, 15 U.S.C. § 1601 et seq., and its implementing Regulation Z, 12 C.F.R. pt. 1026, establish the basic rights, liabilities, and responsibilities of consumers who use credit cards and of financial institutions or other persons that offer or service credit cards.
26.
Subject to subtitle B of the CFPA, the Bureau is authorized to enforce TILA under subtitle E of the CFPA with respect to any person subject to TILA. 15 U.S.C. § 1607(a), (a)(6).
27.
TILA defines a “creditor” as “a person who both (1) regularly extends, whether in connection with loans, sales of property or services, or otherwise, consumer credit which is payable by agreement in more than four installments or for which the payment of a finance charge is or may be required, and (2) is the person to whom the debt arising from the consumer credit transaction is initially payable on the face of the evidence of indebtedness or, if there is no such evidence of indebtedness, by agreement.” 15 U.S.C. § 1602(g).
28.
Citizens is a “creditor” as defined under TILA.
29.
Under TILA, “creditors” are liable for their failure to comply with their obligations surrounding billing error notices and unauthorized use claims, and they are liable for failing to provide credit counseling referrals when consumers call a designated toll-free number. 15 U.S.C. §§ 1637, 1643, 1666.
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30.
The Bureau therefore may enforce TILA and Regulation Z with respect to Citizens.
Count I (TILA)
Denying Claims Absent Fraud Affidavits
31.
The Bureau re-alleges and incorporates by reference Paragraphs 1-19 and 25-30 of this Complaint.
32.
In numerous instances when consumers filed either billing error notices or claims of unauthorized use, Citizens automatically denied the consumers’ claims because the consumer failed to comply with requests to provide Fraud Affidavits, including signing the affidavits under penalty of perjury and with a provision agreeing to testify as witnesses.
33.
Citizens’s practice of automatically denying billing error claims or claims of unauthorized use for failure of the consumers to provide Fraud Affidavits, including agreeing to testify as witnesses, violated Regulation Z. See 12 C.F.R. §§ 1026.12(b) and 1026.13(f) and Comments 12(b)-3 and 13(f)-3.
Count II (CFPA)
Denying Claims Absent Fraud Affidavits 34.
The Bureau re-alleges and incorporates by reference Paragraphs 1-19 and 25-30 of this Complaint.
35.
The CFPA defines “enumerated consumer laws” to include TILA. 12 U.S.C. § 5481(12)(O).
36.
Citizens is a “covered person” under the CFPA. 12 U.S.C. § 5481(6)(A). Case 1:20-cv-00044 Document 1 Filed 01/30/20 Page 7 of 12 PageID #: 7
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37.
Under the CFPA, a covered person’s violation of a Federal consumer financial law, which includes enumerated consumer laws and rules thereunder, violates the CFPA. 12 U.S.C. §§ 5536(a)(1)(A), 5481(14). 38.
By virtue of its violations of the TILA and Regulation Z, as described in Count I, Citizens violated the CFPA.
Count III (TILA)
Failing to Refund Finance Charges and Fees When Resolving Billing Error Notices or Claims of Unauthorized Use in Consumers’ Favor 39.
The Bureau re-alleges and incorporates by reference Paragraphs 1-14, 20- 21, and 25-30 of this Complaint.
40.
In numerous instances when consumers filed billing error notices or claims of unauthorized use with Citizens, and the Bank resolved the claims in consumers’ favor, Citizens did not refund the full amount due, including finance charges and fees.
41.
Citizens’s failure to refund related finance charges and fees when it resolved billing error notices or claims of unauthorized use in consumers’ favor violated sections 133 and 161 of TILA (15 U.S.C. §§ 1643, 1666) and sections 1026.12(b)(1)(ii) and 1026.13(e)(1) of Regulation Z.
Count IV (CFPA)
Failing to Refund Finance Charges and Fees When Resolving Billing Error Notices or Claims of Unauthorized Use in Consumers’ Favor 42.
The Bureau re-alleges and incorporates by reference Paragraphs 1-14, 20- 21, and 25-30 of this Complaint.
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43.
The CFPA defines “enumerated consumer laws” to include TILA. 12 U.S.C. § 5481(12)(O).
44.
Citizens is a “covered person” under the CFPA. 12 U.S.C. § 5481(6)(A). 45.
Under the CFPA, a covered person’s violation of a Federal consumer financial law, which includes enumerated consumer laws and rules thereunder, violates the CFPA. 12 U.S.C. §§ 5536(a)(1)(A), 5481(14). 46.
By virtue of its violations of the TILA and Regulation Z, as described in Count III, Citizens violated the CFPA.
Count V (TILA)
Failing to Deliver Written Notices of Acknowledgment and Denial to Consumers Who Filed Billing Error Notices
47.
The Bureau re-alleges and incorporates by reference Paragraphs 1-14, 22, and 25-30 of this Complaint.
48.
In numerous instances when consumers filed billing error notices, Citizens failed to give consumers written notices of acknowledgement and, if appropriate, written notices of denial.
49.
Citizens’s practice of failing to provide written notices of acknowledgement or denial in response to billing error notices violated subsections (c)(1) and (f)(1) of section 1026.13 of Regulation Z. 12 C.F.R. § 1026.13(c)(1), (f)(1). Count VI (CFPA)
Failing to Deliver Written Notices of Acknowledgment and Denial to Consumers Who Filed Billing Error Notices
50.
The Bureau re-alleges and incorporates by reference Paragraphs 1-14, 22, and 25-30 of this Complaint.
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51.
The CFPA defines “enumerated consumer laws” to include the TILA. 12 U.S.C. § 5481(12)(O).
52.
Citizens is a “covered person” under the CFPA. 12 U.S.C. § 5481(6)(A). 53.
Under the CFPA, a covered person’s violation of a Federal consumer financial law, which includes enumerated consumer laws and rules thereunder, violates the CFPA. 12 U.S.C. §§ 5536(a)(1)(A), 5481(14). 54.
By virtue of its violations of the TILA and Regulation Z, as described in Count V, Citizens violated the CFPA.
Count VII (TILA)
Failing to Provide Credit Counseling Referrals 55.
The Bureau re-alleges and incorporates by reference Paragraphs 1-14 and 23-30 of this Complaint.
56.
In numerous instances when consumers called the toll-free number designated by Citizens for credit counseling referrals, the Bank failed to provide credit counseling referrals.
57.
Citizens’s practice of failing to provide credit counseling referrals violated section 127 of TILA (15 U.S.C. § 1637) and section 1026.7(b)(12)(iv)(A) of Regulation Z. Count VIII (CFPA)
Failing to Provide Credit Counseling Referrals 58.
The Bureau re-alleges and incorporates by reference Paragraphs 1-14 and 23-30 of this Complaint.
59.
The CFPA defines “enumerated consumer laws” to include TILA. 12 U.S.C. § 5481(12)(O).
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60.
Citizens is a “covered person” under the CFPA. 12 U.S.C. § 5481(6)(A). 61.
Under the CFPA, a covered person’s violation of a Federal consumer financial law, which includes enumerated consumer laws and rules thereunder, violates the CFPA. 12 U.S.C. §§ 5536(a)(1)(A), 5481(14). 62.
By virtue of its violations of the TILA and Regulation Z, as described in Count VII, Citizens violated the CFPA.
DEMAND FOR RELIEF 63.
Wherefore, the Bureau, pursuant to Sections 1054 and 1055 of the CFPA, 12 U.S.C. §§ 5564 and 5565, and the Court’s own equitable powers, requests that the Court:
a. Permanently enjoin Citizens from committing future violations of the CFPA, TILA, or any other provision of “Federal consumer financial law,” as defined by 12 U.S.C. § 5481(14);
b. Award monetary relief as the Court finds necessary to redress injury to consumers resulting from Citizen’s violations of the CFPA and TILA, including but not limited to damages, restitution, and the refund of monies paid;
c. Order disgorgement against Citizens of any ill-gotten gains; d. Award civil money penalties;
e. Award the costs of bringing this action; and f. Award additional relief as the Court may determine to be just and proper.
Dated: January 30, 2020 Respectfully submitted, Case 1:20-cv-00044 Document 1 Filed 01/30/20 Page 11 of 12 PageID #: 11
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Cara Petersen
Acting Enforcement Director
Deborah Morris
Deputy Enforcement Director
Alusheyi Wheeler
Assistant Litigation Deputy
/s/ Rebeccah Watson
Rebeccah Watson (DC #989313) Charles Eric Mothander (DC #1032539)
Enforcement Attorneys
Bureau of Consumer Financial Protection
1700 G Street, NW
Washington, DC 20552
Telephone (Watson): 202-435-7895 Telephone (Mothander): 202-435-7321
Fax: 202-435-7722
E-mail: [email protected]
E-mail: [email protected]
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Stipulation ()
PDF of this document (12 pages)
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UNITED STATES DISTRICT COURT DISTRICT OF RHODE ISLAND
Bureau of Consumer Financial Protection,
Plaintiff,
v.
Citizens Bank, N.A., Defendant.
Case No. 1:20-cv-00044-WES-LDA
STIPULATED FINAL JUDGMENT AND ORDER
The Consumer Financial Protection Bureau (Bureau) commenced this civil action on January 30, 2020, to obtain injunctive and monetary relief and civil penalties from Citizens Bank, N.A. (Citizens). The Complaint alleges violations of the Truth in Lending Act (TILA), 15 U.S.C. §§ 1637, 1643, 1666, Regulation Z, 12 C.F.R. Part 1026, and Section 1036(a) of the Consumer Financial Protection Act of 2010 (CFPA), 12 U.S.C. § 5536(a)(1)(A), in connection with Citizens’ alleged failure to: reasonably investigate and appropriately resolve billing error notices and claims of unauthorized use by automatically denying such claims for failure to return a fraud affidavit; credit consumers’ accounts for fees and finance charges when unauthorized use and billing errors occurred; provide consumers with required acknowledgment and denial notices regarding billing error notices; and disclose required credit counseling information to consumers when consumers called the toll-free number designated for such purpose. The Bureau and Citizens agree to entry of this Stipulated Final Judgment and Order (Order), without adjudication of any issue of fact or law, to settle and resolve all matters in dispute arising from the conduct alleged in the Complaint.
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FINDINGS 1.
This Court has jurisdiction over the parties and the subject matter of this action.
2.
Citizens neither admits nor denies the allegations in the Complaint, except as specified in this Order. For purposes of this Order, Citizens admits the facts necessary to establish the Court’s jurisdiction over the parties and the subject matter of this action. 3.
Citizens waives all rights to seek judicial review or otherwise challenge or contest the validity of this Order and any claim it may have under the Equal Access to Justice Act, 28 U.S.C. § 2412, concerning the prosecution of this action to the date of this Order. Each Party agrees to bear its own costs and expenses, including, without limitation, attorneys’ fees.
4.
Entry of this Order is in the public interest.
DEFINITIONS 5.
The following definitions apply to this Order: a. “Board” means Citizens’ duly-elected and acting Board of Directors, or a committee thereof.
b. “Citizens” means Citizens Bank, N.A., and its successors and assigns. c. “Complaint” means the complaint the Bureau filed against Citizens Bank, N.A. on January 30, 2020, to commence this civil action. d. “Effective Date” means the date on which the Order is entered by the Court. Calculation of time limitations will run from the Effective Date and be based on calendar days, unless otherwise expressly noted. e. “Regional Director” means the Regional Director for the Northeast Region for the Office of Supervision for the Consumer Financial Protection Bureau, or his or her delegate.
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f. “Related Consumer Action” means a private action by or on behalf of one or more consumers or an enforcement action by another governmental agency brought against Citizens based on substantially the same facts as described in the Complaint.
CONDUCT PROVISIONS I Prohibited Conduct IT IS ORDERED that:
6.
Citizens and its officers, agents, servants, employees, and attorneys who have actual notice of this Order, whether acting directly or indirectly, may not violate TILA, 15 U.S.C. §§ 1637, 1643, and 1666; Regulation Z, 12 C.F.R. §§ 1026.7(b)(12)(iv)(A), 1026.12(b), and 1026.13(c)(1)-(2), (e)(1), (f); and Section 1036(a) of the CFPA, 12 U.S.C. § 5536(a)(1)(A), by automatically denying billing error notices and claims of unauthorized use for failure to provide a fraud affidavit signed under penalty of perjury; failing to credit reimbursable fees and finance charges to consumers’ accounts when unauthorized use and billing errors occur; failing to provide consumers with required acknowledgment and denial notices upon receipt or resolution of billing error notices; and failing to provide required credit counseling information to consumers who call the toll-free number designated for such purpose.
II Affirmative Requirements Relating to Citizens’ Credit Card Account Management Program IT IS FURTHER ORDERED that:
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7.
Citizens and its officers, agents, servants, employees, and attorneys who have actual notice of this Order, whether acting directly or indirectly, must take the following affirmative actions:
a. Maintain policies and procedures designed to ensure that the treatment, handling, and resolution of billing error notices and unauthorized use claims are in accordance with TILA, 15 U.S.C. §§ 1637(b), 1643, and 1666; Regulation Z, 12 C.F.R. §§ 1026.7(b)(12)(iv)(A), 1026.12(b), and 1026.13(c)(1)-(2), (e)(1), (f); and Official Interpretations, 12 C.F.R. pt. 1026, Supp. I, Comments 12(b)-3 and 13(f)-3;
b. Continue to prohibit Citizens’ employees from requiring consumers to complete, in support of a credit card claim, a fraud affidavit containing language requiring the consumer to submit the affidavit under penalty of perjury;
c. Maintain procedures designed to ensure that, when billing error notices and unauthorized use claims are found to be valid, any fees or finance charges to be refunded to consumers are calculated from the date of the error or unauthorized use;
d. Maintain procedures designed to ensure that consumers who call Citizens’ toll-free number seeking credit counseling are given at least three referrals to credit counseling services in the state in which the billing address for the account is located or the state specified by the consumer, as required under 12 C.F.R. § 1026.7(b)(12)(iv)(A); and e. Maintain policies and procedures to test Citizens’ compliance with TILA, 15 U.S.C. §§ 1637(b), 1643, and 1666; Regulation Z, 12 C.F.R. §§ 1026.7(b)(12)(iv)(A), 1026.12(b), and 1026.13(c)(1)-(2), (e)(1), (f); and Case 1:20-cv-00044-WES-LDA Document 83 Filed 05/23/23 Page 4 of 12 PageID #: 2666
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Official Interpretations, 12 C.F.R. pt. 1026, Supp. I, Comments 12(b)-3 and 13(f)-3.
III Compliance Plan
IT IS FURTHER ORDERED that:
8.
Within 60 days of the Effective Date, Citizens must create and implement a comprehensive compliance plan designed to ensure that Citizens’ credit card account management complies with TILA, 15 U.S.C. §§ 1637(b), 1643, and 1666; Regulation Z, 12 C.F.R. §§ 1026.7(b)(12)(iv)(A), 1026.12(b), and 1026.13(c)(1)-(2), (e)(1), (f); and Official Interpretations, 12 C.F.R. pt. 1026, Supp. I, Comments 12(b)-3 and 13(f)-3, and the terms of this Order (Compliance Plan). The Compliance Plan must include, at a minimum:
a. Detailed steps for addressing each action required by this Order; b. A mechanism to ensure that the Board is kept apprised of the status of compliance actions;
c. Specific timeframes and deadlines for implementation of the steps described above.
Citizens will provide the Compliance Plan to the Bureau upon request. IV Role of the Board IT IS FURTHER ORDERED that:
9.
Citizens’ Board will have the ultimate responsibility for proper and sound management of Citizens and for ensuring that Citizens complies with this Order. Case 1:20-cv-00044-WES-LDA Document 83 Filed 05/23/23 Page 5 of 12 PageID #: 2667
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10.
Citizens’ Board and Chief Executive Officer must review all plans and reports required by this Order, and any submissions to the Bureau prior to such submission.
11.
One year after the Effective Date, Citizens must submit to the Regional Director a written compliance progress report (Compliance Report) that has been approved by the Board, the accuracy of which is sworn to under penalty of perjury, and which, at a minimum:
a. Describes the steps that Citizens’ Board has taken to reasonably assess whether Citizens is complying with the Compliance Plan and each applicable paragraph and subparagraph of the Order; b. Describes in detail whether and how Citizens has complied with the Compliance Plan and each applicable paragraph and subparagraph of the Order, including the manner of verification of such compliance and any corrective actions taken to remedy potential noncompliance with the applicable requirement, paragraph, or subparagraph; and c. Attaches a copy of each Order Acknowledgment obtained under Section VII, unless previously submitted to the Bureau. 12.
Citizens’ Board shall:
a. Authorize whatever actions are necessary for Citizens to assess whether Citizens is complying with the Compliance Plan, and each applicable paragraph and subparagraph of the Order;
b. Authorize whatever actions, including corrective actions, are necessary for Citizens to fully comply with the Compliance Plan, and each applicable paragraph and subparagraph of the Order; and c. Require timely reporting by management to Citizens’ Board and Chief Executive Officer on the status of compliance obligations. Case 1:20-cv-00044-WES-LDA Document 83 Filed 05/23/23 Page 6 of 12 PageID #: 2668
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MONETARY PROVISIONS V Order to Pay Civil Money Penalty IT IS FURTHER ORDERED that:
13.
Under Section 1055(c) of the CFPA, 12 U.S.C. § 5565(c), by reason of the violations of law alleged in the Complaint, which Citizens neither admits nor denies except as specified in paragraph 2, Citizens must pay a civil money penalty of $9 million to the Bureau.
14.
Within 10 days of the Effective Date, Citizens shall pay the civil money penalty by wire transfer to the Bureau or to the Bureau’s agent in compliance with the Bureau’s wiring instructions.
15.
The civil money penalty paid under this Order will be deposited in the Civil Penalty Fund of the Bureau as required by Section 1017(d) of the CFPA, 12 U.S.C. § 5497(d).
16.
Citizens shall treat the civil money penalty paid under this Order as a penalty paid to the government for all purposes. Regardless of how the Bureau ultimately uses those funds, Citizens may not: a. Claim, assert, or apply for a tax deduction, tax credit, or any other tax benefit for any civil money penalty paid under this Order; or b. Seek or accept, directly or indirectly, reimbursement or indemnification from any source, including but not limited to payment made under any insurance policy, with regard to any civil money penalty paid under this Order.
17.
In the event of any default on Citizens’ obligations to make payment under this Order, interest, computed under 28 U.S.C. § 1961, as amended, will accrue on any Case 1:20-cv-00044-WES-LDA Document 83 Filed 05/23/23 Page 7 of 12 PageID #: 2669
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outstanding amounts not paid from the date of default to the date of payment, and will immediately become due and payable.
18.
Citizens relinquishes all dominion, control, and title to the funds paid under this Order to the fullest extent permitted by law and no part of the funds may be returned to Citizens.
19.
The facts alleged in the Complaint will be taken as true and be given collateral estoppel effect, without further proof, in any subsequent action by the Bureau to enforce the Order or its rights to any payment or monetary judgment under the Order.
20.
Under 31 U.S.C. § 7701, Citizens, unless it already has done so, must furnish to the Bureau its taxpayer-identification numbers, which may be used for purposes of collecting and reporting on any delinquent amount arising out of this Order. 21.
Within 30 days of the entry of a final judgment, order, or settlement in a Related Consumer Action, Citizens must notify the Regional Director of the final judgment, order, or settlement in writing. That notification must indicate the amount of redress, if any, that Citizens paid or is required to pay to consumers and describe the consumers or classes of consumers to whom that redress has been or will be paid. To preserve the deterrent effect of the civil money penalty in any Related Consumer Action, Citizens may not argue that Citizens is entitled to, nor may Citizens benefit by, any offset or reduction of any monetary remedies imposed in the Related Consumer Action because of the civil money penalty paid in this action or because of any payment that the Bureau makes from the Civil Penalty Fund. If the court in any Related Consumer Action offsets or otherwise reduces the amount of compensatory monetary remedies imposed against Citizens based on the civil money penalty paid in this action or based on any payment that the Bureau makes from the Civil Penalty Fund, Citizens must, within 30 days after entry of a final order granting such offset or reduction, notify the Bureau and Case 1:20-cv-00044-WES-LDA Document 83 Filed 05/23/23 Page 8 of 12 PageID #: 2670
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pay the amount of the offset or reduction to the U.S. Treasury. Such a payment will not be considered an additional civil money penalty and will not change the amount of the civil money penalty imposed in this action.
COMPLIANCE PROVISIONS VI Reporting Requirements IT IS FURTHER ORDERED that:
22.
Citizens must notify the Bureau of any development that may affect compliance obligations arising under this Order, including but not limited to, a dissolution, assignment, sale, merger, or other action that would result in the emergence of a successor company; the creation or dissolution of a subsidiary, parent, or affiliate that engages in any acts or practices subject to this Order; the filing of any bankruptcy or insolvency proceeding by or against Citizens; or a change in Citizens’ name or address. Citizens must provide this notice at least 30 days before the development or as soon as practicable after the learning about the development, whichever is sooner. 23.
Within 7 days of the Effective Date, Citizens must: a. Designate at least one telephone number and email, physical, and postal addresses as points of contact that the Bureau may use to communicate with Citizens; and b. Identify all businesses for which Citizens is the majority owner, or that Citizens directly or indirectly controls, by all of their names, telephone numbers, and physical, postal, email, and Internet addresses. 24.
Citizens must report any change in the information required to be submitted under Paragraph 23 at least 30 days before the change or as soon as practicable after learning about the change, whichever is sooner. Case 1:20-cv-00044-WES-LDA Document 83 Filed 05/23/23 Page 9 of 12 PageID #: 2671
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VII Order Distribution and Acknowledgment IT IS FURTHER ORDERED that:
25.
Within 7 days of the Effective Date, Citizens must submit to the Regional Director an acknowledgment of receipt of this Order, sworn under penalty of perjury. 26.
Within 30 days of the Effective Date, Citizens must deliver a copy of this Order to each of its Board members, executive officers and managers, including frontline managers, who have responsibilities related to the subject matter of the Order. 27.
For 5 years from the Effective Date, Citizens must deliver a copy of this Order to any business entity resulting from any change in structure referred to in Section VI, any future Board members, executive officers and managers, including front-line managers, who will have responsibilities related to the subject matter of the Order, before they assume their responsibilities.
28.
Citizens must secure a signed and dated statement acknowledging receipt of a copy of this Order, ensuring that any electronic signatures comply with the requirements of the E-Sign Act, 15 U.S.C. §§ 7001-7006, within 30 days of delivery, from all persons receiving a copy of this Order under this Section. 29.
Ninety days from the Effective Date, Citizens must submit to the Bureau a list of all persons and their titles to whom this Order has been delivered under the Section of this Order titled “Order Distribution and Acknowledgment” and a copy of all signed and dated statements acknowledging receipt of this Order under Paragraph 28. VIII Recordkeeping IT IS FURTHER ORDERED that:
30.
Citizens must create, for at least 5 years from the Effective Date, the following business records: All documents and records necessary to demonstrate full Case 1:20-cv-00044-WES-LDA Document 83 Filed 05/23/23 Page 10 of 12 PageID #: 2672
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compliance with each provision of this Order, including all submissions to the Bureau. Citizens must retain these documents for at least 5 years after creation and make them available to the Bureau upon the Bureau’s request.
IX Notices IT IS FURTHER ORDERED that:
31.
Unless otherwise directed in writing by the Bureau, Citizens must provide all submissions, requests, communications, or other documents relating to this Order in writing, with the subject line, “CFPB v. Citizens Bank, N.A., Case No. 1:20-cv-00044,” and send them by email to [email protected]. X Compliance Monitoring IT IS FURTHER ORDERED that:
32. Within 14 days of receipt of a written request from the Bureau, Citizens must submit additional compliance reports or other requested information, which must be sworn under penalty of perjury; provide sworn testimony; or produce documents. 33.
Citizens must permit Bureau representatives to interview any employee or other person affiliated with Citizens who has agreed to such an interview regarding: (a) this matter; (b) anything related to or associated with the conduct described in the Complaint; or (c) compliance with this Order. The person interviewed may have counsel present.
34.
Nothing in this Order will limit the Bureau’s lawful use of compulsory process, under 12 C.F.R. § 1080.6.
XI Transfer or Assignment of Operations
IT IS FURTHER ORDERED that:
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35.
Should Citizens seek to transfer or assign all or part of its operations that are subject to this Order, Citizens must, as a condition of sale, obtain the written agreement of the transferee or assignee to comply with all applicable provisions of this Order.
XII Retention of Jurisdiction IT IS FURTHER ORDERED that:
36.
All pending motions are hereby denied as moot. The Court will retain jurisdiction of this matter for the purpose of enforcing this Order.
IT IS SO ORDERED.
DATED this ___ day of ______________, 2023.
_________________________________
Honorable William E. Smith United States District Court Judge
23 May Case 1:20-cv-00044-WES-LDA Document 83 Filed 05/23/23 Page 12 of 12 PageID #: 2674