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Entries in Citibank (7)

Wednesday
May022012

Student Loans: Law Graduate Sues Lenders for Interest 'Scheme'

iStockphoto/Thinkstock(NEW YORK) -- A law school graduate is suing his student loan lenders saying they had a "scheme" to collect additional interest from students in debt.

Justin Kuehn, 29, a graduate of George Washington University Law School, accused Citibank, Discover and Discover's subsidiary, The Student Loan Corporation, of "deceiving" borrowers into believing that their monthly payments had been reduced because of an interest rate reduction when the payment toward the principal had just been lowered. Kuehn said he hopes his case becomes a class-action lawsuit.

Kuehn, who practices commercial litigation in New York City with the law firm Brar Wexler Eagel and Squire, is requesting an injunction and unspecified damages from the defendants for systematically breaching contracts and violating business law.

By the time Kuehn graduated from law school in 2007, he had four separate private graduate school loans. He consolidated the four—two with Citibank and two unsubsidized loans with Sallie Mae—with the Student Loan Corporation in November 2007. The original balance of his consolidated loan, with a fixed interest rate of 9.55 percent and standard payments, was $99,148.19.

Kuehn had an automatic debit monthly payment of $845.72 from his checking account for four years, occasionally making additional payments to the principal to repay the loan faster, until January 2012. That's when he said the Student Loan Corporation "unilaterally" dropped his monthly payment to $539.27, but his interest rate was only reduced by 0.5 percent to 9.05 percent from 9.55 percent.

"They claimed it was due to an interest rate reduction but I knew that, just by the amount of that drop, that couldn't be correct," Kuehn told ABC News.

His monthly statement read, "The variable interest rate on your student loan has changed. Your monthly payment has been adjusted to reflect the new interest rate, as stated above."

Because of this change, he later learned the amount of principal being repaid on the loan declined to $42.59 a month from $335.67, while the amount of interest paid remained "basically the same," declining only to $496.68 from $510.05. Kuehn said this information was not disclosed by the lender.

Kuehn said he was "outraged" when he realized the term of his loan had been extended without his consent.

A spokesman for Discover said the bank couldn't comment on pending litigation. Discover completed its acquisition of The Student Loan Corporation, a private student loan business, in January 2011.

Mark Rodgers, a spokesman for Citibank, said the bank has not been served with the lawsuit, "so we would be unable to speak to the matter at this point."

Kuehn's loans are private loans, but federal loan recipients have reported similar problems, saying they were forced to pay more interest over a longer period.

The Department of Education has been transferring federal student loans to loan-servicing companies, similar to The Student Loan Corporation, which then adjust their payments up or down, the nonprofit news organization ProPublica reported last week.

“Student loans can be terribly complex and difficult to understand for even the most sophisticated borrower, much less for a student who may have limited credit experience,” said Gerri Detweiler, financial expert with Credit.com. “You shouldn't need a degree in finance to understand what a student loan will really cost, but these days it's not a bad idea.”

Until the company responds to the lawsuit or his concerns, Kuehn said he continues to make the lower monthly payment on his loan.

"I'm trying to figure out what's going on," he said. "Initially you just want the problem fixed and then you realize there is no communication on their end, so you're forced to take action."

Copyright 2012 ABC News Radio

Wednesday
Feb152012

Citibank Pays to Settle Charges of Mortgage Fraud

Chris Goodney/Bloomberg via Getty Images(NEW YORK) -- One of the nation's biggest banks agreed Wednesday to pay tens of millions of dollars to settle charges of mortgage fraud.

For more than six years Citibank's residential mortgage business engaged in what court records call "reckless lending" that cost American taxpayers millions and drove up rates of foreclosure and eviction.  Citi has now agreed to pay nearly $160 million to settle charges it "failed to implement even the most basic quality control."

Loans Citi certified as eligible for government insurance, prosecutors said, were fraudulent, deficient and "never should have been insured."

Taxpayers are paying for Citi's misconduct and prosecutors expect additional losses in the future.

Copyright 2012 ABC News Radio

Monday
Aug222011

S&P President Deven Sharma Resigns; Citibank Exec to Replace Him

Jay Mallin/Bloomberg via Getty Images(NEW YORK) -- Deven Sharma, president of Standard & Poor's, the rating company that downgraded the U.S. AAA credit rating, setting off weeks of volatility in the global markets, has resigned.

On Monday, S&P owner McGraw-Hill announced Sharma's decision to "pursue other opportunities" amid reports that the Justice Department is investigating S&P regarding its rating for various mortgage securities leading up to the financial crisis, but claims Sharma's resignation has no relation to the matter, according to the Financial Times.

Citibank chief operating officer Douglas Peterson will replace Sharma next month as Sharma continues with S&P in an advisory role until the end of the year.

McGraw-Hill said Monday that the search for a new S&P president has been going on since the firm's split into two organizations -- S&P and McGraw-Hill Financial -- at the end of last year.

"Deven assisted us with the creation of these two high- growth segments and was then ready for new challenges.  Accordingly, we began a process to identify a new leader for S&P," McGraw-Hill stated in a release Monday.

McGraw-Hill appointed Sharma S&P president in 2007.

Copyright 2011 ABC News Radio

Tuesday
Jun212011

Are You Safe from Growing Number of Cyber Attacks?

Jupiterimages/Thinkstock(NEW YORK) -- The websites of Sega, Sony, Citibank, and the U.S. Senate have all been hit by hackers.

In Sega's case, the firm said over the weekend that the attackers got access to account information for 1.3 million users.  And that wasn't even unusual.

Somewhere out there are loosely-organized shadow groups -- there's one that calls itself Anonymous, another that registered a website in the Bahamas under the name Lulz Security -- trying to take credit for some of the more public attacks.

Security consultants said you're probably safe if you take precautions -- such as deleting emails from strangers and changing your passwords regularly.  Most firms that handle sensitive data, such as credit card numbers, try to stay a step ahead of the intruders.  But it's full-time work.

Hacking -- once seen as the pastime of geeky teenagers who didn't have better things to do with their technological skills -- has apparently ballooned in just the last few months.  Google's Gmail service was attacked from somewhere in China, and there have been debates over whether cyber attacks from other countries qualify as acts of war.

"It feels to me like there are definitely more hacks taking place," said Graham Cluley, who analyzes online trends for the computer-security firm Sophos.  In an email to ABC News, he broke the attackers into three types:

-- "Hacktivists: They may be doing it for laughs, or believe they are making a political point, but they don't have a financial motive," Cluley said.

-- Genuine criminals:  Cluley called them "your regular identity thieves -- interested in stealing identities, credit card detail, because of the money that can be made out of them."

-- Infiltrators: "These are the hackers who appear to be hacking organizations and government bodies with the intention of stealing sensitive information with -- perhaps -- military or economic motivation," said Cluley. 

He cited attacks on U.S. military contractors, such as an internal network at the aerospace giant Lockheed Martin as a recent example.

Cluley said one likely increase was in the number of organizations admitting they'd been hacked.  The number of attacks is tremendous, he said, though most are unsuccessful or, in many cases, merely annoying.

Copyright 2011 ABC News Radio

Friday
Jun102011

Citibank Breach: Six Tips to Bank Online Safely

Hemera Technologies/Thinkstock(NEW YORK) -- Citibank acknowledged that a data security breach has exposed information on about 210,000 of its bankcard customers.  While these data breaches seem to be growing more commonplace, experts offer tips to make online banking more secure.

Citi's incident, one of the first known hacking cases at a bank, compromised data including credit card account numbers, names and contact information like email addresses.  There have been several other public hacking announcements this year from Sony, Lockheed Martin, and Michael's Stores, leaving consumers feeling overwhelmed by security concerns.

Adam Levin, co-founder of Credit.com and former director of the New Jersey Division of Consumer Affairs, said it is best for consumers to carry the mindset that there will be more data breaches in the future.

"The level of sophistication of hacking has grown exponentially," Levin said.  "And the bad guys are ahead of the good guys."

Avivah Litan, security analyst with technology research and advisory firm Gartner, said that for both online banking and online credit card management, consumers have "very good protection" under a rule set forth by the Federal Reserve called Regulation E that limits consumer liability for unauthorized card usage.  Though consumers may experience an inconvenience, they will almost always recover financially, she said.

Large businesses usually can afford security protection for their banking.  But Litan said online banking for small businesses is "very risky" because Regulation E does not apply to businesses.

To limit the exposure of you or your business in online banking, here are some tips from some security experts:

1. Never accept incoming communications purporting to be from financial institutions you do business with, whether by email or phone call.

"Call them back using only the phone numbers published on your cards or statements," Richard Wang, manager of SophosLabs US, said.

2. Update your security software on your computer.

"Make sure it's malware protection and have the most sophisticated firewalls and anti-intrusion software," Levin said.  "Those start screaming at you anytime you're even near something that has a worm on it."

3. Check the security of your mobile device and your mobile banking apps.

Mobile banking and payments are becoming more common, which means hackers may pay more attention in that marketplace also.

Andrew Hoog, chief investigative officer of viaForensics, a digital forensics and security company, found three unencrypted (i.e., less secure) passwords in apps for Foursquare, LinkedIn and Netflix on the Android in a recent round of app security testing.  Citibank received a "pass" rating for its app.

4. When logging in to perform online transactions, always enter the website address directly in your browser.

Never click links that claim to take you to banking sites.

5. Use strong passwords and don't reuse your bank password elsewhere.

Use two factor authentication if your bank offers it, such as confirmation numbers by text message to your phone, Wang said.

Levin adds that you should even have unusual answers to additional security questions.

"If they ask for your mother's maiden name, say 'superwoman,' or something outrageous that you would only know," Levin said.

6. Be active in monitoring your financial accounts.

Levin said he does not believe eliminating your online accounts is the answer because they can be the best tools to monitor your financial activity in real time.  He suggests you monitor your online accounts at least once a day.´╗┐

Copyright 2011 ABC News Radio

Thursday
Jun092011

Citi Says Hacker Accessed Info of 200,000 Cardholders

Justin Sullivan/Getty Images(NEW YORK) -- Citigroup Inc. announced Thursday that computer hackers got access to the bank's online account.

The breach provided hackers with access to data of about 200,000 bank cardholders in North America.

Names, account numbers, and contact information, such as phone numbers, were accessed. However, customer's social security number, date of birth, card expiration date ,and card security code (CVV) were not compromised, according to Citi.

Citi says it is contacting customers who were impacted.

"Citi has implemented enhanced procedures to prevent a recurrence of this type of event," reads a statement from the company. "For the security of these customers, we are not disclosing further details."

The breaching of Citi's account information serves as one more occurrence in a string of cyber attacks on high profile companies, such as Google and Sony.

Copyright 2011 ABC News Radio´╗┐

Wednesday
Feb092011

Big Banks to Charge Fees for Low Checking Balances

Photo Courtesy - Getty Images(NEW YORK) - If you don't have a large amount of cash in your checking account, you may have to start paying a hefty fee to keep it, reports the Los Angeles Times.

Four of the country's largest banks - Bank of America, Wells Fargo, JPMorgan Chase and Citibank - will start charging monthly fees to customers who carry a low balance in their checking accounts. The charges could add up to as much as $100 a year.

"Wealthy consumers will be able to avoid these charges by maintaining high balances," Jeremy T. Rosenblum, a Philadelphia lawyer and consumer finance specialist, told the Los Angeles Times. "But for the poor and moderate-income people whose balances are lower, it's going to be much harder to avoid these fees."

The new fees are likely the result of new regulations on the banking industry that limit late fees and overdraft penalties that provided billions in revenue to the banks each year.

Copyright 2011 ABC News Radio







ABC News Radio