Regulators Investigate Citibank Student Loan Servicing Practices

By on August 3, 2015

In its Q2 2015 financial statements filed on August 3rd, Citibank disclosed that it was being investigated by regulators for certain student loan servicing practices.

Citibank stated that it was cooperating with regulators, but also indicated that a financial institution with similar loan-servicing practices was subject to enforcement actions.  Specifically, the U.S. Consumer Financial Protection Bureau (CFPB) announced last month that Discover Bank was ordered to $18.5 million in consumer refunds and fines for employing illegal student loan servicing practices, including overstating minimum amounts due on billing statements, and denying consumers information needed to obtain income-tax benefits.

Accordingly, Citibank warned investors that regulators may levy financial penalties or require Citibank to remediate its customers.

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