Citibank refunds $1 million following misleading statements made to customers about their rights under the ePayments Code

The Australian Securities and Investments Commission (ASIC) announced that Citibank has refunded around 4,000 current and former customers more than $1 million after misstating the bank's obligations around unauthorised transactions on customers' accounts.

Citibank had refused customers' requests to investigate unauthorised transactions because it claimed the requests were made outside the time period permitted under the Visa and MasterCard scheme chargeback protections.

Affected customers had made reports to Citibank about 'card not present' unauthorised transactions (such as internet transactions), where a payment was made using the credit or debit card number details, rather than the physical card itself.

In letters sent to customers in response to their requests, Citibank incorrectly stated that because the request was made outside the timeframe specified by Visa and MasterCard, it was not required to assess the claim, and that the customer's only options were to approach the merchant or a fair trading agency.

The letter would likely have misled customers about their protections under the ePayments Code. The ePayments Code provides protections to consumers for unauthorised transactions - these protections are separate to, and not the same as, the protections provided by Visa and MasterCard.

As a result, customers did not have their claims properly considered in accordance with Citibank's contractual obligations with those customers under the ePayments Code.

To remediate affected consumers:
  • Current customers will have their accounts refunded
  • Former customers who are owed more than $20 will be sent a bank cheque
  • Former customers whose individual amounts were more than $500 and cannot be located will have their funds treated in accordance with unclaimed money requirements
  • For former customers owed less than $20, and those who cannot be located with amounts less than $500, an equivalent amount will be donated to charity
If a donation is made and the customer comes forward, Citibank will honour individual refunds.

Citibank has also reviewed its processes to ensure there are no further miscommunications about its obligations under the ePayments Code.

"If an unauthorised payment has been made on their account, customers should be confident that their bank will appropriately investigate the payment. Customers should never be misled about their rights under the Code." ASIC Deputy Chair Peter Kell said.

"Banks should ensure in all their communications that they are clear and accurate with customers about their consumer rights," Mr Kell said.

Citibank's remediation program covered consumers who may have received the letter between 1 January 2009 to 22 July 2016, and did not have their claim appropriately assessed.

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