Cuomo: Citibank Agrees to Back Down on Checking Fees

Citibank has reversed its plan to charge fees with certain conditions on checking accounts after reaching an agreement with New York State Attorney General Andrew M. Cuomo, who claimed the bank did not issue proper notification to consumers. 

In the agreement announced by Cuomo today, Citibank –  a unit of Citigroup -  will not charge fees on checks until January 31, 2011. The bank had originally planned to begin charging fees today, which Cuomo said would have affected more than one million consumers nationwide on what “were supposed to be free checking accounts.”

“Adding unexpected fees to consumers’ checking accounts can hit families very hard in these times,” Cuomo said. “Citibank is doing the right thing for their customers through this agreement.”

For years, Citibank had offered “free checking” services to consumers who opened an “EZ Checking” or “Access” account – as long as the consumers used either direct deposit or made two monthly online bill payments, Cuomo said. The free checking offer saved Citibank customers $7.50-$9.50 in monthly maintenance fees, or $0.50-$1.00 in per-check charges after the first ten checks.

On November 2, 2009, Citibank decided that “EZ Checking” and “Access” account holders would be charged a monthly fee and per-check charges if their combined balances fell below $1,500 – starting on Feb. 1, 2010. The company then failed to adequately notify affected consumers about the change, Cuomo said.

“The vast majority of account holders who would have been subjected to these fees would have been charged at least $9.50 per month,” a statement from Cuomo’s office said.

Under the agreement, Cuomo said that: 

• Any consumers who signed up for free checking between Jan. 1, 2009 and Nov. 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 Jan. 31, 011.

All consumers affected by this agreement will be notified by mail and Citibank will post notice of these policies on its consumer banking website, Cuomo said.