PHILADELPHIA (CN) – Citigroup deceptively bills “thousands of retired persons” for “credit protection” insurance though many of them are excluded from its benefits, and it does this without telling them the terms and conditions, without making any effort to determine if they are qualified for it, and without even registering it as insurance, a class action claims in Federal Court.
The 26-page class action is the latest in a long string of class actions that accuse banks of resorting to increasingly outré and unconscionable methods of sucking money from customers.
This class objects to Citigroup’s “illicit activities” of pushing so-called credit protection for its credit cards. It uses a slew of labels for this, including Credit Protect, Credit Protector, Payment Protector, PaymentAid, PaymentAid Plus, and “other monikers,” according to the complaint.
The class claims this is insurance, but Citigroup does not market, sell, register or identify it as insurance, “thereby avoiding state regulation.”
The class also objects to “the deceptive and misleading manner in which it [Citigroup] offers the Payment Protection plan to consumers, and the manner in which it administers claims for benefits.”
Citigroup pushes the “service” through telemarketers and direct mail, the class claims. “It represents Payment Protection as a service that pays the required minimum monthly payment due on the subscriber’s credit card account and excuses the subscriber from paying the monthly interest charge and the Payment Protection plan fee for a limited period of time. … Citi claims that this service provides ‘so much protection and peace of mind for so little!'”
But the class claims that the plan is actually “a dense maze of limitation, exclusions and restrictions, making it impossible for consumers to determine what Payment Protection covers and whether it is a sound financial choice.”
The class claims that “Citi makes no effort to determine whether a cardholder is eligible for Payment Protection benefits at the time of sale. As a consequence, the company bills thousands of retired persons – many of whom are senior citizens – along with the unemployed, those employed by family members, and part-time or seasonal Pennsylvania residents, as well as disabled individuals, for Payment Protection coverage, even though their employment or health status prevents them from receiving benefits under the plan.”
The class claims Citi “makes no effort to determine whether subscribers become ineligible for Payment Protection benefits after they are enrolled in the plan. Accordingly, when subscribers’ employment or health status change, they will continue to pay for the product even though they may no longer be eligible for benefits under the plan.”
The class claims that “Citi requires customers to enroll for Payment Protection coverage before it provides subscribers with the terms and conditions of the plan.”
As a result of these “misleading and deceptive marketing practices,” the class claims that “Citi has increased its profits by many millions of dollars, all thanks to a product which provides virtually no benefits to thousands of Pennsylvania residents who are nevertheless charged for the product month in and month out.”
The class seeks declaratory judgment, an injunction, restitution, and compensatory, treble and punitive damages for deceptive and unfair trade, breach of contract and unconscionability. Its lead counsel is Richard Honik.