> it caught the error in a routine internal review mandated under federal law
Ladies and gentlemen, this is what regulations are all about. If not for a federal law forcing Citi to audit for this sort of thing they would either never have caught that they stole hundreds of millions of dollars, or more likely just never have reported it to anyone.
The next time some politician tells you regulations are always bad, only lead to more expenses for customers, remember this.
I don't want to defend all regulation is evil strawman, and I don't know if this particular regulation is good or bad but your argument looks very weak.
A proper value comparison would be 'cost of all audits caused by this regulation' vs 'benefits gained from mistakes found by it'. You also need to assess risk reduction, what kind of risks it protects from and set a value on that.
Then you could realistically say if it's net positive or not.
And when something is mandatory across industry it's easy to price in directly to consumers because nobody can compete on it, so this likely doesn't eat on a bottom line but increase price for consumers.
Again not trying to argue that this or all regulation is bad, just that your evaluation of what's working seems deeply flawed.
The other side might argue that the $330MM ultimately came from customers. If Citi didn't have to do such audits and no one complained, why should Citi be forced to "wealth re-distribute" these funds from one set of customers to another set?
I find it interesting how this show up the day after I had to call the customer service to clarify an interest fee on my account that din't make sense. So here is what happened, I got hit with a $12.xx monthly interest on a $2000ish purchase which I made less than 30 days ago and hasn't shown up on my previous statement. For clarification, my current APR on the card is 5.99%.
It took me two reps and two accounts managers to learn how these things are calculated:
1) Interests are daily compounded.
2) Interests are not calculated on actual balance but on the average daily balance.
3) If you don't pay your statement balance in full by the end of the month, you lose your grace period for future purchases and interest would start accruing as soon as the transactions goes through. To reset this it would require you to make two full statement payments in a row.
4) If you purchase something and return it and the return takes a few days to process, you would still pay interest on for those days.
The rep and the first account manager that spoke to weirdly dint have the basic understanding of interest rates. She argued that the $12 interest was on the $2000 for 4 days at the rate of 5.99%. Funny enough, she still din't find anything odd when I pointed out that it would mean, by the end of the year, I would pay $1095 ie. > 50% of the principal in interest!
Anyways the second rep was knowledgeable enough to explain it.
Is this for a US based credits card? I have never heard of needing pay off for two full months. Or for the average daily balance used in calculation and I'm pretty sure neither is the case for any of my cards. But I will need to check.
I suppose one good thing in this is that Citi caught this error on its own and not as a result of a class action suit. So customers will receive the full value of their overpayment, rather than a puny voucher dictated by a court where a large chunk goes to the lawyers bringing suit.
So say that a customer was overcharged $100 in interest in Jan 2017 and they carried a balance all year. By Dec 2017 they carried an extra $100 on their credit card balance needlessly so they paid >$20 in additional interest (APR 20%) due to this overcharge.
The article only mentions returning the original amount AFAIK so it looks like Citi might still be profiting from this error.
servers right. well said mabbo
>The next time some politician tells you regulations are always bad, only lead to more expenses for customers, remember this.
[+] [-] mabbo|8 years ago|reply
Ladies and gentlemen, this is what regulations are all about. If not for a federal law forcing Citi to audit for this sort of thing they would either never have caught that they stole hundreds of millions of dollars, or more likely just never have reported it to anyone.
The next time some politician tells you regulations are always bad, only lead to more expenses for customers, remember this.
[+] [-] rubber_duck|8 years ago|reply
A proper value comparison would be 'cost of all audits caused by this regulation' vs 'benefits gained from mistakes found by it'. You also need to assess risk reduction, what kind of risks it protects from and set a value on that. Then you could realistically say if it's net positive or not.
And when something is mandatory across industry it's easy to price in directly to consumers because nobody can compete on it, so this likely doesn't eat on a bottom line but increase price for consumers.
Again not trying to argue that this or all regulation is bad, just that your evaluation of what's working seems deeply flawed.
[+] [-] electrograv|8 years ago|reply
This seems like a really good one :)
[+] [-] rainbowmverse|8 years ago|reply
[+] [-] JumpCrisscross|8 years ago|reply
I hear this line more, now, from people selling Bitcoin.
[+] [-] conanbatt|8 years ago|reply
Lets get that number and compare.
[+] [-] Cw67NTN8F|8 years ago|reply
Do they ever mistake to give people free money (at such scale?) I bet the stealing happens a lot more often.
[+] [-] 111_1_111|8 years ago|reply
[deleted]
[+] [-] dsfyu404ed|8 years ago|reply
The inverse opinion that regulation is always good is equally terrible.
[+] [-] basementcat|8 years ago|reply
[+] [-] nivla|8 years ago|reply
It took me two reps and two accounts managers to learn how these things are calculated:
1) Interests are daily compounded.
2) Interests are not calculated on actual balance but on the average daily balance.
3) If you don't pay your statement balance in full by the end of the month, you lose your grace period for future purchases and interest would start accruing as soon as the transactions goes through. To reset this it would require you to make two full statement payments in a row.
4) If you purchase something and return it and the return takes a few days to process, you would still pay interest on for those days.
The rep and the first account manager that spoke to weirdly dint have the basic understanding of interest rates. She argued that the $12 interest was on the $2000 for 4 days at the rate of 5.99%. Funny enough, she still din't find anything odd when I pointed out that it would mean, by the end of the year, I would pay $1095 ie. > 50% of the principal in interest!
Anyways the second rep was knowledgeable enough to explain it.
[+] [-] jjeaff|8 years ago|reply
[+] [-] donarb|8 years ago|reply
[+] [-] bgirard|8 years ago|reply
The article only mentions returning the original amount AFAIK so it looks like Citi might still be profiting from this error.
[+] [-] san_dimitri|8 years ago|reply
[+] [-] snambi|8 years ago|reply
[+] [-] JoeBrill|8 years ago|reply
[deleted]