Citi to Pay $5 Million in Robo-Signing Case
25 September 2018 - 8:30AM
Dow Jones News
By Micah Maidenberg
Citigroup Inc. has agreed to pay $5 million to some users of
Macy's Inc.-branded credit cards, after vendors that provided
services in consumer bankruptcy cases carried out their duties by
relying on so-called robo-signing technology.
Between 2012 and 2015, tens of thousands of proofs of claim--the
forms creditors use to seek funds from people or entities going
through bankruptcy--were "improperly signed" using the technology,
according to a statement Monday from the Justice Department.
The situation emerged out of an arrangement between a Citibank
affiliate and Macy's-owned FDS Bank. The Citi affiliate issued
Macy's-branded cards, with FDS responsible for servicing them,
according the Justice Department's statement. FDS hired contractors
to carry out various bankruptcy-related services.
"In some cases, the electronic credentials of the vendor's
employees were used to file claims where the employee did not
review the claim," the statement said. Macy's did not immediately
respond to a request for comment.
In late 2015, Citi began servicing the accounts itself and
discovered the practices. A Citi spokeswoman said it halted the
vendor's filings and reported the problem to the executive office
of the U.S. Trustee Program, which oversees case administration in
federal bankruptcy courts.
The spokeswoman added that Citi was pleased to have resolved the
issue and regretted any inconvenience to customers. The $5 million
the bank agreed to pay will flow to affected cardholders, who will
receive refunds of $70 per account, she said.
Write to Micah Maidenberg at micah.maidenberg@wsj.com
(END) Dow Jones Newswires
September 24, 2018 18:15 ET (22:15 GMT)
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