Office of Maryland Attorney General J. Joseph Curran, Jr.

February 28, 2002 Media Inquiries: Sean Caine 410-576-6357


Settlement Requires Bank to Monitor Promotions by Its Business Partners

Attorney General J. Joseph Curran, Jr. announced today that his Consumer Protection Division, along with those of 26 other states and Puerto Rico, entered into an agreement with the nation’s largest credit card issuer to reform the way products are marketed to its customers by telemarketing firms.

For many years, Citibank has contracted with telemarketing firms that sell a variety of products and services to bank customers. In exchange for providing its customer lists, Citibank receives a percentage of the sales by these companies.

The states raised concerns that the marketing practices of Citibank’s business partners were deceptive and often resulted in consumers being charged for products and services–such as discount buying clubs, roadside assistance, credit card loss protection and dental plans–that they had no idea they agreed to purchase.

Many solicitations relied on free trial offers that failed to adequately disclose that it was the responsibility of the consumer to cancel during a trial period. Making matters worse, because individuals were not asked to provide their credit card information directly to the vendor, many consumers did not understand that their credit cards would be charged once the free trial period expired.

"Citibank profits by sharing information about its customers with telemarketers," Curran said. "This settlement requires it to ensure that telemarketers using its customer lists do not engage in deceptive practices."

The settlement agreement requires Citibank to include consumer protection policies in its contracts with telemarketing firms. These reforms will:

  • Prohibit deceptive solicitations;
  • Require the bank to review and approve all scripts and marketing materials to ensure they comply with the agreement;
  • Require telemarketing firms to comply with all applicable consumer protection laws;
    Prohibit customer charges unless there is express authorization of the account holder; and
  • Require clear and conspicuous disclosure of the identity of the telemarketing company if the script makes reference to the bank.

Citibank also is required to resolve any complaints from card holders who indicate that a charge is unauthorized. Citibank agreed to pay the states a total of $1.6 million, of which Maryland will receive $40,000 for consumer education.

Joining Maryland in the agreement with Citibank are: Arizona, California, Colorado, Florida, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Mississippi, Missouri, Montana, Nevada, New Mexico, New York, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Puerto Rico, Vermont, Washington and Wisconsin.