Column: Citi insists cardholder agreed to pay needless fees but can’t prove it


Bad experiences with companies can provide valuable lessons for consumers. For instance, I got trapped as a teen by the Columbia House dozen-records-for-a-penny racket. It taught me there’s always a catch to an unusually sweet deal. Always.

Teachable moments notwithstanding, however, businesses shouldn’t get away with unfair practices.

I’ve written in the past about Citi’s credit card protection program — how its terms aren’t clearly disclosed and contain hidden pitfalls.


Now comes a tale of woe that will be recognizable to many people: discovering that you’ve been paying fees for a program you don’t recall ever signing up for.

High school English teacher Paul Anderson, 35, reckons he’s paid thousands of dollars to Citi over the years for card protection he says he never wanted or needed.

“Half my payment each month went to this program,” he told me. “I had no idea. I thought these were just normal fees.”

Anderson’s experience serves as a cautionary tale about making sure you read and understand your monthly card statements. But it also speaks to a corporate mindset that is the exact opposite of the adage about the customer always being right.

Nowadays, the customer is just plain wrong — even when a company can’t prove it.

Credit protection is a form of insurance so you’re covered in the event of unforeseen setbacks such as a job loss or disability.


Card issuers typically charge a percentage of whatever balance you’re carrying, and in return they say they’ll make sure you don’t start racking up late fees if you start missing payments.

Anderson, who lives in Chicago, said he’s never missed a card payment. He said he was unaware of Citi’s program until a friend told him recently about a 2015 settlement involving the bank.

Citi was ordered by the Consumer Financial Protection Bureau to refund about $700 million to customers “harmed by illegal practices related to credit card add-on products and services.”

“Roughly 7 million consumer accounts were affected by Citibank’s deceptive marketing, billing, and administration of debt protection and credit monitoring add-on products,” the bureau said at the time.

Anderson said this got him wondering about his own Citi card account, which he’s held since 2005. He checked a recent monthly statement and discovered a fee of more than $150 for “payment safeguard.”

“You can say I’m not very financially literate,” Anderson said. “But that just looked like a routine card fee, a cost of doing business. It doesn’t look optional.”

He contacted Citi in March, canceled the card protection and asked for a refund as per the 2015 CFPB settlement. Anderson says Citi told him to pound sand. So he complained to the consumer agency, which shared his filing with Citi.

The company responded to Anderson in a letter dated May 7 insisting that he signed up for what was then called Credit Protector on Nov. 17, 2006, “during a telephone conversation with our Customer Service representative.”

Anderson will just have to trust Citi on this score. The company said that “due to the length of time that has elapsed since the enrollment was processed, we are unable to obtain a copy of the call recording for this enrollment.”

Citi said Anderson was sent emails and letters over the years about fees being charged. “Our records do not reflect the statements or the letters were returned to us as undeliverable,” it said.

The bank didn’t say so, but the upshot of the letter apparently was that, no, you can’t have your money back. Anderson complained again to the CFPB. He received a second response from Citi in a letter dated May 15.

“As stated in our previous letter dated May 7, 2019, we respectfully decline your request for credit,” the bank said, although its previous letter said no such thing.

“Our records reflect that you enrolled in the Credit Protector program on Nov. 17, 2006, during a telephone conversation with our Customer Service representative,” it reiterated. This would be the same telephone conversation Citi couldn’t prove ever took place.

Anderson lodged a third complaint with the CFPB. In a letter dated May 29, Citi said that “while we understand your desire to have this matter resolved in your favor, with this final letter, we consider this matter resolved and will not respond to additional inquiries related to this matter.”

That bang you heard was a multibillion-dollar company slamming the door on a longtime customer in good standing.

Let’s be clear: It was Anderson’s responsibility to examine his credit card statements and challenge any questionable payments. Everyone should make a regular habit of closely examining financial statements for possible errors or UFOs.

But Citi doesn’t exactly come off smelling like a rose.

What it now calls its Payment Safeguard program charged 85 cents a month for every $100 in balance carried by a participating cardholder. Anderson, a schoolteacher, frequently carried a balance, sometimes a very large one after consolidating debt from other plastic.

The CFPB, in announcing the $700-million settlement, said Payment Safeguard was among a number of Citi financial products that were sneakily foisted on customers. “Some of the deceptive practices happened during telemarketing sales calls,” the bureau said.

Maybe that’s what happened to Anderson. He has no recollection of either calling Citi in 2006 or asking for credit protection. Perhaps a telemarketer called him and used vague language to enroll him in the plan.

The fact that Citi has no record of the call doesn’t inspire a lot of confidence.

“As a courtesy, we mailed our customers letters to provide them opportunity to alert us to the enrollment, if they believed they were enrolled without their knowledge,” Citi told Anderson in its May 29 letter. “Because we did not hear from you, we considered your enrollment valid.”

Anderson said he didn’t receive any such emails or letters.

Citi had to pay hundreds of millions of dollars to aggrieved customers, plus an additional $35-million fine, for what the CFPB called illegal practices involving the very product Anderson is complaining about — a product so troublesome the company stopped offering it in 2015.

All things considered, I’d say Anderson, not the bank, deserves the benefit of the doubt here.

Maybe you don’t refund all his money in a situation like this. But you don’t slam the door either.

And it appears Citi, with a little prodding, has reached the same conclusion.

Anderson told me Monday that he’d just received a call from a Citi service rep and was assured that his 14 years as a cardholder were valued by the company.

The rep said Citi wouldn’t refund all the fees Anderson paid over the years, but would give back everything he shelled out since 2017, or about $2,600.

“That’s obviously better than nothing,” Anderson said. “I’m happy I’m receiving at least some money back.”

Props to Citi for doing the stand-up thing (or as much of a stand-up thing as the company was capable of).

Sometimes the customer is right.

David Lazarus’ column runs Tuesdays and Fridays. He also can be seen daily on KTLA-TV Channel 5 and followed on Twitter @Davidlaz. Send your tips or feedback to