Tuesday, October 20, 2009
More Chicanery From A Bank That Utah U.S. Senator Bob Bennett Voted To Bail Out; Citibank Cancels Co-Branded Gas Credit Cards With Virtually No Notice
In October 2008, Utah's Republican U.S. Senator Bob Bennett was one of the majority who voted to bail out the big banks. And one of them, Citibank, has once again shown its gratitude by sticking it to the customer.
Effective October 14th, Citibank arbitrarily cancelled hundreds of co-branded MasterCard accounts, primarily cards associated with gas stations, without giving customers adequate advance notice. According to the company, the account closings include credit cards affiliated with Shell, Citgo, ExxonMobil and Phillips 66-Conoco. Media sources include the Associated Press, MSNBC, and American Banking News. You can also read this previous post about other Citibank abuses.
Customers with exemplary payment records are being affected. Shannon Burdette found out that her Shell MasterCard account had been closed when her card was rejected while trying to refuel her vehicle. After calling the customer service number on the card, she was informed that her account had been closed because of a negative item on her credit report. When Burdette checked her credit report, the only negative thing she saw was “closed at credit grantor’s request”. She and her husband had used the card regularly and had always paid the balance on time. [Ed. Note: Such people are no longer considered "good customers", because they don't produce additional revenue in fees and finance charges by carrying a balance.]
Citibank sent out letters informing customers of the change on October 12th, two days before it became effective. Ironically, this is more advance notice than the law requires; no law, including the Credit CARD Act of 2009 that has started to take effect, prevents banks from closing down credit accounts without warning. Credit card issuers all maintain the right, typically listed in the fine print on credit card agreements.
Yet believe it or not, Citi did not discontinue the sale of these cards altogether. It is still accepting applications, promising rewards like 3 percent cash back on fuel purchases and 1 percent cash back on other spending. Go figure.
The move may be in anticipation of future financial troubles for the banking behemoth. Citi posted $8 billion in consumer credit losses for its third quarter last week, including both mortgages and credit cards. Like many banks with big consumer lending portfolios, Citi is expecting defaults on credit cards to rise in coming months. Credit card delinquencies typically track the unemployment rate, which is officially at 9.8 percent and is expected to top 10 percent soon (the real unemployment rate is considered to be double those figures). Citibank is also one of several targets of a number of class action suits being filed nationwide over abusive and excessive overdraft fee policies and practices.
There are also complaints from other Citibank customers about the bank suddenly raising credit card interest rates from 8.9 percent to 29.99 percent. These increases are being directed towards customers who've never had a late payment, who normally pay their balances monthly, and who also have significant credit lines on their cards. In this case, the customers are being given more advance notice.
There are two ways for customers to get back at these banks. First, quit doing business with them. Don't open any accounts with Citibank in the first place; visit the BoycottCitibank website for more "horror" stories about their operations. Close any current Citibank accounts and find alternatives at the earliest opportunity. And second, punish the members of Congress who voted to bail them out by supporting their opponents. Bob Bennett has two strong Republican opponents, Mark Shurtleff and Cherilyn Eagar. Shurleff has previously expressed his opposition to the TARP bailouts HERE, and claims that TARP beneficiaries were some of Bennett's biggest campaign contributors. Likewise, Eagar has also criticized Bennett's support of TARP. All Utah Republicans need to do is decide who is the better alternative to Bennett; Mark Shurtleff, or Cherilyn Eagar.
Update late October 20th: Shortly after this post, the Salt Lake Tribune reported that a total of 25 Citigroup execs have contributed a combined $32,000 to Senator Bennett's re-election campaign since July 2009. Both Cherilyn Eagar and Mark Shurtleff see the Citigroup contributions as continued evidence of Bennett's ties to corporations that are over-reliant on government. "Corporate welfare recipients are not going to support someone like me who wants to have a level playing field and who will not put their votes up to be sold or traded or gambled away in some backroom. I'm just not that kind of a candidate," charged Cherilyn Eagar. Shurtleff's camapaign manager Jason Powers said, "This is just payback. We can't change Washington, D.C., by sending the same people back there who have been part of the problem." In response, Senator Bennett defended the contributions and his TARP vote, saying the effort helped stabilize an economy that could easily have gone into free fall. He also pointed out that he opposed the second round of TARP funding, the automotive bailouts and the economic stimulus bill, and dismissed Eagar and Shurtleff's remarks, saying "I don't necessarily respond to the attacks of my opponents, particularly when they are out hustling money from any place they can possibly get it."
Of course, there is a third way to get back at Citibank, but it usually results in deprivation of liberty. On October 19th, a hood rat dressed in a parka in 80-degree weather robbed the Foothill Boulevard branch of Citibank in La Crescenta, CA of $5,000. The camera caught a good picture of him, so the only remaining question is how much of it will he get to spend before he is caught.