A company recently acquired by Citigroup has been accused by the Federal Trade Commission of using deceptive lending practices to manipulate people into buying overpriced mortgages and credit insurance.
Associates First Capital Corp., bought last November by Citigroup, reportedly persuaded consumers to consolidate their debts into a single loan – typically a home equity loan – with the promise of lower monthly interest payments, according to a lawsuit filed against Citigroup.
The new loans came with substantial fees that often made it more expensive than the original debt. Citigroup said it has established ways for customers to address any issues they may have.
“We have reached out to nearly a half million customers including every Associates home loan customer, and we will continue these outreach efforts,” the company said in a statement. “We are hopeful that the FTC will come to recognize that its decision to pursue this case is counterproductive to our shared objective of ensuring the availability of attractive loan products to all borrowers.”
The government lawsuit does not seek specific damages, though it does ask the court to reimburse consumers and stop the company from further violations.
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