Citibank Sued Over Late Fees; Class-Action Status Sought

Three law firms representing a Texas woman have sued Citibank, seeking hundreds of millions of dollars in damages from the No. 2 U.S. credit card issuer, which it accuses of tricking consumers into paying bloated fees for late payments.

The lawsuit seeks class-action status, alleging that Citibank deliberately adopted “hyper-technical and misleading payment crediting guidelines” to make it difficult for consumers to avoid fees for late payments, according to court documents. “Citibank’s scheme is a trap designed to collect fee revenue,” said the lawsuit, filed Oct. 1 in Texas Eastern District Federal Court in Texarkana.

The lawsuit contends that those guidelines include setting an arbitrary deadline of 10 a.m. for payments to be processed by Citibank’s data center in Nevada in order to be credited for that same working day.

Jack Morris, a spokesman for Citibank, said he could not comment on the suit. He said class-action lawsuits filed against Citibank are not uncommon and that such legal action “hardly ever goes anywhere.”

Citibank is a unit of Citigroup Inc., the world’s largest financial services company. It was created by a merger of banking company Citicorp and insurer Travelers Group.

The lawsuit, filed on behalf of Willi Jo Jimmerson, who has a Citibank Visa card, contends that Citibank deliberately adopted a series of payment hurdles hidden in small print.