When 'free checking' isn't free

By David Ellis, staff writer


NEW YORK (CNNMoney.com) -- Free checking will remain free for a just little bit longer for some Citibank customers.

In an announcement made Monday, New York Attorney General Andrew Cuomo said his office had struck an agreement with the banking giant for failing to notify customers about fee changes on several of its free checking accounts.

"Free checking still means free checking," he said during a press conference.

Cuomo, who has become a formidable opponent of the nation's biggest banks, alleged that customers who opened an "EZ Checking" or "Access" checking account with Citibank, were never warned that the company could impose check charges or monthly maintenance fees even if the customer met the basic account requirements.

When Citibank finally did alert its customers to the changes last November however, customers were not given adequate enough notice, according to Cuomo's office. It estimated that the fees would have cost consumers tens of millions of dollars.

Citibank, and its parent company Citigroup (C, Fortune 500), will not pay a settlement as a result of Monday's announcement. The company also denied it had violated any laws in the matter.

Customers who did sign up for a free checking account between Jan 1, 2009 and November 5, 2009 however, will have their free checking extended until the end of 2010.

Citibank also said it will not charge qualifying customers check fees until January 31, 2011.

Cuomo said he hoped that Monday's settlement with Citi would serve as a notice to other banks.

With the industry bracing for a wave of profit-crimping new regulations, lenders have been closely examining a number of options aimed at boosting their bottom line, including raising new fees and instituting new ones on their checking account customers.

"We will continue to scrutinize the fees that banks are charging customers," he said.

Monday's announcement is Cuomo's latest attempt to rein in questionable practices at both Citigroup and the nation's other leading financial firms.

Last month he demanded that the company, as well as the seven other biggest bailout recipients, divulge details on the payment plans for 2009 bonuses in an effort to see if they had made any progress rooting out some of the destructive pay practices that helped fuel the recent economic crisis. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 17,810.06 91.06 0.51%
Nasdaq 4,712.97 11.10 0.24%
S&P 500 2,063.50 10.75 0.52%
Treasuries 2.32 -0.02 -0.86%
Data as of 7:04am ET
Company Price Change % Change
Bank of America Corp... 17.12 0.12 0.71%
Kinder Morgan Inc 39.75 -0.17 -0.43%
Apple Inc 116.47 0.16 0.14%
Intel Corp 35.59 -0.36 -1.00%
Microsoft Corp 47.98 -0.72 -1.48%
Data as of Nov 21

Sections

This arrangement, announced Friday, illustrates how the lines have blurred between traditional TV networks and newfangled options like Netflix. More

The Obama administration is touting that its immigration action will boost wages. But the hike amounts to only $170 a year by 2024. More

Obama doesn't have the authority to create a startup visa, but part of his reform announcement could include a workaround for entrepreneurs: 'parole status.' More

Nearly half of all Americans say there's a chance they'll have to work during a holiday between Thanksgiving and New Year's, according to a new poll. And one in four say they'll have to work whether they want to or not. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.