Customers of Citigroup Global Markets Inc. (CGMI) might want to look at their statements and review their fee arrangements. It turns out that the company billed some customers more than the agreed-upon rate. After an investigation, New York State Attorney General Eric Schneiderman reached an agreement with CGMI, a subsidiary of Citigroup, to reimburse Citi customers charged higher fees than they negotiated.
$16 million in refunds will go to about 31,000 Citigroup customers. Some have already started to receive the money. But investigators say it’s possible thousands more don’t realize that the fees they paid were too high and they can now get reimbursed.
The fee-padding affected customers with what Citigroup calls “TRAK” accounts. You typically pay a fee for advisory services ranging from 1% to 1.5%. But you could negotiate these fees and many successfully arranged fees lower than the standard rate. But that’s not what they were charged. The company continued to charge many people higher rates, according to Schneiderman’s investigation.
The probe began in 2012 after a Westchester customer complained that she had negotiated a 1.2% fee for her account, but the company charged her the standard 1.5% over a period of three years. This meant she paid more than $3,000 in overcharges.
Schneiderman said, “Often, it takes just one tip to uncover an error that affects tens of thousands of individuals. In this case, a bank customer complained to my office about her account. We investigated that complaint and found a widespread problem, one that cost bank customers, in New York and across the country, millions of dollars.”
CGMI apparently is cooperating with the New York Attorney General’s Office. The company launched a wider review of other types of accounts to make sure that any account holders who have been overcharged will also get restitution.