Citizens to return $14M to customers

Citizens Bank has agreed to return $14 million to customers for failing to credit them the full amounts of their deposits, federal regulators said yesterday.

In an enforcement action described as the first of its kind, the bank also was fined $20.5 million by the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corp. and the Treasury Department’s Office of the Comptroller of the Currency for shorting individuals and businesses millions of dollars from 2008 to 2013, the regulators said.

Providence, R.I.-based Citizens kept the difference when the totals marked on deposit slips didn’t match the amount deposited or when the bank’s scanners misread deposit slips or checks, regulators said.

The bank’s “shoddy practices ... deprived consumers of money that was rightfully theirs when they made deposits,” said CFPB Director Richard Cordray.

When a bank “violates the basic tenet of what it means to offer a deposit account — that is, to receive and keep safe the customer’s funds — it imbues a deep sense of mistrust,” Cordray told reporters in a conference call.

Citizens said in a statement that deposits credited to customers who gained from the errors roughly equaled shorted deposits. Customers who were over-credited will keep the excess funds applied to their accounts, the bank said.

In the fall of 2013, Citizens installed a new teller system to automate the process of checking for deposit errors, it said, so that numbers could be checked in the customer’s presence.