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Citi penalized for alleged student loan servicing failures

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Citi penalized for alleged student loan servicing failures

The Consumer Financial Protection Bureau ordered Citibank NA to pay a $2.8 million civil money penalty for allegedly engaging in deceptive or unfair acts that misled student loan borrowers.

The bank must also allot no less than $3.8 million to redress the impact on customers.

The CFPB claims that the Citigroup Inc. subsidiary's practices may have caused borrowers to believe they were not eligible for tax deductions on certain interest payments, misrepresented the minimum amount to be paid and erroneously terminated borrowers' in-school deferments, among other violations.

Citibank consented to the CFPB's consent order, but neither admitted nor denied the findings.