Citigroup Settles FTC Lending Case

FINANCE

*

Citigroup Inc. will pay a record penalty as part of a $240-million settlement of predatory lending charges, the Federal Trade Commission said.

Citigroup agreed to pay the FTC $215 million in consumer redress. It also will pay $25 million in connection with a class-action settlement, resolving allegations that its Associates First Capital Corp. subsidiary gouged the poor and those with spotty credit records.

The FTC said the $215 million was the largest consumer protection settlement in its history.

An FTC lawsuit filed in March 2001 alleged that Associates used deceptive marketing practices to induce consumers to refinance existing debts into home loans with high interest rates, costs and fees.

Citigroup shares were down $1.46, or 5%, to $27.65 on the New York Stock Exchange.