As a result of an interim agreement with Citigroup Global Markets Inc., a subsidiary of Citigroup, more than 15,000 CGMI customers who were overcharged fees on their investment accounts will receive reimbursements of more than $4.5 million.
Consumers were overcharged when CGMI failed to rebate some customers’ accounts after periods of inactivity when fees shouldn’t have been charged.
CGMI identified the overcharges as part of an internal review conducted in cooperation with the Attorney General Office’s investigation of the company’s fees.
The initial investigation led to $16 million going back to 31,000 CGMI customers, and now thousands more consumers will get money back.
“My office will work with any financial institution that identifies and wants to correct an error that harmed its customers,” New York Attorney General Eric T. Schneiderman said Wednesday.
For some investment accounts, CGMI chares fees at the beginning of a quarter for account management during the upcoming quarter. A CGMI customer’s account may be “frozen” during an inactive period.
In some cases, customers shouldn’t be charged fees during that period, said Schneiderman.
CGMI’s review revealed that if a customer requested a refund of these fees that covered a period when the customer’s account was frozen, CGMI sometimes rebated the fees to the customer. However, CGMI’s review revealed that thousands of customers who were overcharged fees during frozen periods weren’t given rebates they should have received, either because they didn’t request a rebate, or because CGMI didn’t have policies and procedures to determine when rebates should be given.
As a result, CGMI overcharged more than 15,000 TRAK accounts. CGMI will repay its customers for the overcharges, a total of more than $4.5 million. More than 2,700 New York customers are set to receive a total of about $657,000, he said.
The Attorney General’s investigation of CGMI began in 2012 after a complaint from a Westchester resident led the Attorney General’s Office to investigate fee overcharge issues at CGMI. The investigation will result in the repayment of more than $20 million in principal and interest for fees CGMI overcharged 46,000 customers.
