Citizens Bank Profited Off Customer Math Errors, Class Action Lawsuit Alleges

Amidst debate over how much banks value clients, one among them stands accused of purposefully profiting off the math errors of its own customers.

A new class action lawsuit against RBS Citizens alleges the bank has made millions off of customers that deposited more cash than they wrote down on their deposit slips, according to Courthouse News. The case, led by chiropractic office Todd Bowers Inc., says that instead of returning the extra money to customers, RBS Citizens siphoned it off to a non-customer account used for its own purposes.

"Citizens Bank developed a policy and employs a practice whereby customer funds are being diverted daily for the benefit and use by Citizens Bank without the knowledge, consent or approval of the customer,” the lawsuit alleges, according to Courthouse News.

Citizens Bank told The Huffington Post in an email that the bank is "reviewing the complaint and looking into this customer's concerns."

This isn’t the first time banks have been accused of taking advantage of erroneous customer arithmetic. In 2009, Wells Fargo customers filed a class action lawsuit against the bank alleging similar practices. That lawsuit even alleged Wells Fargo even had a name for the practice called the "Excess Funds Retention Policy."

Banks have repeatedly been accused of exploiting their customers by charging them exorbitant fees when they overdraw their accounts, the Birmingham News reports. That trouble is compounded by more than a third of account holders not being familiar with their bank’s overdraft policies. Citizens Bank agreed to pay $137.5 million last month to settle accusations that it unfairly charged customers overdraft fees.

JPMorgan Chase and Bank of America have also agreed to pay hundreds of millions of dollars to settle overdraft fee abuse allegations. The Consumer Financial Protection Bureau additionally announced in April that it was launching a new investigation into overdraft fees at nine major banks, BusinessWeek reports.

Banks have been additionally accused of systematically exploiting customers through predatory mortgage practices. Countrywide Financial, once the nation's largest mortgage lender, has been accused of duping Americans into loans they couldn't afford then charging them huge fees when payment obligations weren't met. Officials have also accused banks of failing to verify potential homeowners' documents. As a result, millions of Americans have been affected.

Banks make number errors too, however. In January, a man in India notified his bank after finding his balance had swelled to $9.8 billion, the BBC reports. Not everyone is so polite. A couple in New Zealand withdrew $2.3 million and ran for it after a bank mistakenly credited $6.2 million to their account, AOL Daily Finance reports.

Comments

[Carolab]

09:47 PM on 05/10/2012

Apparently nobody has any duty to anyone else in "banking world".

[Bobby212]

02:31 PM on 05/10/2012

Did you buy an iPod directly from Apple between 2006 and 2009? You could be eligible for a class action settlement award!

Check out the newest iPod notice and register for a claim at www.mysettlementclaims.com

[fortressfountain]

08:40 AM on 05/10/2012

Isnt that stealing? I saw a woman was prosecuted because she found money on the ground and did not try to return it.

[KeyopsBack]

06:39 AM on 05/10/2012

If my atm starts spitting out $20 bills I wont be returning them.

[DismayedRepub]

01:58 AM on 05/10/2012

$2.3 million would make for a good retirement in Rio

[Joseph LeCompte]

01:27 AM on 05/10/2012

Heads I win tails you lose

[tmispy]

11:38 PM on 05/09/2012

This reminds me of what is in the small print...

"Dear customer, if our error in math is in your favor you must disclose the error immediately and could also be fined. If the math error is in our favor you must tell us about it to get your money back"

[luvsox]

07:38 PM on 05/09/2012

I love my credit union!

[foulkeblows]

05:36 PM on 05/09/2012

I'm a math teacher and I tell my students that learning math is a social justice issue. Everyone and their brother will try to screw you if you don't know what's going on mathematically.

[notsotupelohoney]

05:53 PM on 05/09/2012

Isn't it really simple Arithmetic? And, I agree with you. I worked in Billing at a major telecommunications giant, if they can screw you, they will.

[Dosadi]

08:54 PM on 05/09/2012

So true. I had a contract that I had to refuse to service because a Local Long Distance company wanted me to program a Poisson equation wrong. The way they wanted it done gave them about $30 million extra a year that they would be stealing from their customers.I refused. They threatened to fire me and I threatened to go public. They paid me the remaining portion of my contract plus a substantial amount of hush money and I left. The next programmer also refused to follow their instructions.

Any one who is involved in a "Bonus Rewards" (exact name) program can breathe a sigh of relief.

[gtoya1331]

03:24 PM on 05/09/2012

Is anyone actually shocked by this? I don't believe banks have ever been viewed as the "good guys"

[Dosadi]

08:59 PM on 05/09/2012

You attempted to use "bank" and "good guys" in the same sentence. You are being sentenced to 50 lashes with a wet noodle for that makes no sense at all.
Shame on you.

[gtoya1331]

09:42 PM on 05/09/2012

is that a promise?

[Valerie Hunsinger]

02:25 PM on 05/09/2012

Banks make a ton of money off of false overdraft fees. Recently, I had an overdraft fee of $20, but had made no transactions that would have caused an overdraft. I had bought gas for $20, and made two other small purchases adding up to around another $20, but had $154 in the bank. I called them and they said "some stores will put a hold on your account for up to $100 until your transaction clears. (I have overdraft protection up to $500) Anyway, I asked who put the hold on it since I didn't want to do business there any longer. They said they had no way to tell, but it was probably someplace I had used my card as debit. Which made no sense, since you can't withdraw money on debit if it isn't there. So I went back to the only place I had used my card as debit and there I found out the truth. It was MY bank that imposed the hold. So they whacked me for $20 for an overdraft for a transaction that never happened. The actual transaction of $20 was covered and then some. But, they put the hold on it and then charged me overdraft fees. Isn't this the same as stealing????

[Mrald]

03:20 PM on 05/09/2012

When you get gas, it is automatic for them to put a hold of $100 plus the amount you charged. It comes off in 24 hours unless it is on the weekend.

If you only have overdraft protection up to $500, than you probably run a pretty low balance in your account consistently....you probably need to learn how to use a check register and subtract all your debits too.

[Valerie Hunsinger]

04:21 PM on 05/09/2012

Thank you, I know how to use a check register and use it faithfully. It's kind of hard to subtract fees you don't know about, wouldn't you say? They don't tell you the amount they hold it for, it can be anywhere from the amount of the actual transaction to $100 or even more. It was my bank who put the freeze on the account, not anyone else. This account is used solely for bill-paying and gas purchases, I never leave more money in it than what is needed to pay bills and buy gas. I have never once had this "freeze" placed on my account until this past incident, and I use the same stores all the time. I live in a very rural area, not a lot of choices. It's not "automatic" or it would happen every time I use my card to get gas. You also missed a bit of my post. The gas cost $20, I had $154 in the account. How do you explain that? I am not rich, if I have to "add" an additional $100 to every transaction, that's more than just ridiculous. Why am I even using a bank? I already pay them to dole my money out to me after I earn it, they charge me for using my own money. You can't cash a payroll check anymore without having an account. So can you curb your sarcasm and tell me just how to get around all of this???

[Kristin Creighton]

07:28 PM on 05/09/2012

Mrald-
Are you crazy? There is no truth in your statement:

"It is automatic for them to put a hold of $100 plus the amount you charged.

I have never had a $100 hold put on my account for getting gas. Also, if the transaction is a debit and not credit, there would be no reason for any kind of hold.

Also, $500 is pretty standard as far as overdraft protection goes. It has nothing to do with how much money is in your account.

I think you should probably get your facts straight before you give someone else advice on how to balance a checkbook

[AskandThink]

03:45 PM on 05/09/2012

A "HOLD" is NOT the same thing as a "DRAFT" nor should it be considered to be. It is NOT a withdrawal but is instead a "freeze" on the account for that amount.

Report them to the Fed Exterminators if they will not reverse these bogus charges immediately!

http://www.ffiec.gov/
.

[AskandThink]

03:52 PM on 05/09/2012

"Exterminators" LOL!!!!!
Pardon me if my Freudian slip was showing...

*EXAMINATORS*

[Valerie Hunsinger]

04:26 PM on 05/09/2012

Thank you . That's what I couldn't understand. They charged me for a "transaction" that never happened, basically. If they froze it, why did they charge an overdraft fee when there was clearly enough in the account to cover it? I was and am still confused. I did ask for the fee to be refunded. They said they "can't". I got such a runaround. They couldn't tell me why it happened, the manager just said, "Don't use your card at the pumps, go inside to pay". Which I am now doing. We'll see how long it takes to find another way to squeeze money from this little account. :/

[Donna Merkle]

02:24 PM on 05/09/2012

Banks,even before the industry came up with direct deposit or ATM's made mistakes. My father had started an account for me. Every week we would go in and deposit $100 to my savings. I would hand them my passbook with the deposit slip and they would hand it back marked that the deposit had been made. One time, the next day after going to the bank, I was checking my passbook and saw that the $100 amount had been marked as $1,000,000 deposit. I ran to find my father and showed it to him. His jaw dropped. He asked me what I thought we should do about it? As much as I wanted to see if they would notice, I knew that I should be the one to bring it to their attention first. Do you know that even by the time that we went in later that afternoon the bank still hadn't noticed? I still wonder what would have happened if I had left it.

[abbitha7]

02:21 PM on 05/09/2012

Big banks are so corrupt.

[mattmarion]

01:41 PM on 05/09/2012

"A couple in New Zealand withdrew $2.3 million and ran for it after a bank mistakenly credited $6.2 million to their account, AOL Daily Finance reports."

Idiots, why only take 1/3 ;)

[Mrald]

03:14 PM on 05/09/2012

I doubt that could have happened...that size of a withdrawal would have sent out all kinds of warning bells

[Dosadi]

08:58 PM on 05/09/2012

Not only that but you can't get that out of an ATM and no teller has that amount in their drawer. In fact on any given day, there is not that much money in that bank branch.

[foulkeblows]

05:31 PM on 05/09/2012

Yup, no way that happened. Who's the source: The National Enquirer?

[sadwitness]

01:36 PM on 05/09/2012

Another great reason to keep the masses dumbed down...