Citibank, N.A. ("Citibank") has reached an agreement with New York Attorney General Andrew M. Cuomo to alter its plan to charge over one million consumers nationwide with fees on what were supposed to be "free checking" accounts.
Under the agreement with Cuomo's office, Citibank will extend the benefits of these free checking accounts to consumers who signed up for them in 2009 for all of 2010. Citibank also will not charge fees on checks until January 31, 2011. The company had originally planned to begin charging these fees, would have cost consumers tens of millions of dollars, on February 1.
"This has been a very difficult year for consumers in New York and across the country who are trying to make ends meet, in many cases without a regular paycheck," said Cuomo. "Adding unexpected fees to consumers' checking accounts can hit families very hard in these times. Citibank is doing the right thing for their customers through this agreement."
For several years, Citibank has advertised and offered "free checking" services to consumers who opened an "EZ Checking" or "Access" checking account, as long as the consumer used either direct deposit or made two monthly online bill payments.
Depending on where the consumer banks, the free checking offer meant that Citibank would not charge monthly maintenance fees of $7.50 or $9.50, or per-check charges of $0.50 or $1.00 after the first ten checks.
Citibank's "free checking" ads, which appeared on their website and in their branches, never disclosed that this service could be terminated at Citibank's discretion. On November 2, 2009, however, Citibank decided that effective February 1, 2010, "EZ Checking" and "Access" account holders would be charged a monthly fee and per-check charges if their combined balances fell below $1,500.
The company then failed to adequately notify affected consumers about the change. The vast majority of account holders who would have been subjected to these fees would have been charged at least $9.50 per month.
Under the agreement:
• Any consumers who signed up for free checking between January 1, 2009 and November 5, 2009 will have their free checking extended for the remainder of 2010.
• All consumers who meet the original conditions they signed up for will continue to get no per-check fees until January 31, 2011.
In order to be eligible under the agreement, consumers must have met the offer's original qualifying conditions in the past year and continue to do so. All affected consumers will receive notice by mail of these changes and Citibank will post notice of these policies on its consumer banking website.
A lot of banks offer "free" checking, but many consumers find out the hard way that "free" isn't always free.
