California D.A. Accuses Citi & Other Companies of Deceptive Practices

Trinity County, California’s District Attorney, Eric L. Heryford, has filed three lawsuits against Citigroup, First Premier Bank, and Discover in federal court, alleging the companies of using deception to sell customers credit card protection plans. According to Heryford, the three similarly worded yet separate lawsuits accuse the companies of violating California’s Unfair Competition Law by tricking customers into buying identity theft protection plans and payment protection plans without their express consent. Heyford’s complaint called these actions “substantially injurious to California consumers and to fair competition in [the] state.”

One of the questionable sales practices includes “slamming,” in which the bank or credit card company enrolls the customer in the extra products even though the customer did not explicitly approve payment for them. Enrollment may be based on online applications, forged or non-existent mailers, deceptive and misleading marketing calls, or nothing at all. Consumers are then charged monthly fees without knowing it or understanding what the charges are for.

The complaint further alleges that the companies have preyed upon disabled people and senior citizens aged 65 and older. Heryford is asking the court to impose a $2,500 civil penalty for each violation of the Unfair Competition Law, as well as an additional $2,500 for each act perpetrated against a disabled or elderly person.

In July 2015, Citigroup agreed to settlements totaling $770 million over similar deceptive practices and problems with debt collection on its credit cards with the Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau.

The cases are: Heryford v. Discover Financial Services, et al. (case number 2:16-cv-00468), Heryford v. Citigroup Inc. et al. (case number 2:16-cv-00469), and Heryford v. First Premier Bank et al. (case number 2:16-cv-00470). All have been filed in the U.S. District Court for the Eastern District of California.

California is represented by Trinity County District Attorney Eric L. Heryford, Richard Golomb and Kenneth J. Grunfeld of Golomb • Spirt, P.C., Roland Tellis of Baron & Budd PC, and Clifford L. Carter and Kirk J. Wolden of Carter Wolden Curtis LLP. Counsel information for Citigroup, First Premier Bank, and Discover was not immediately available.