RedwoodAge.com

Over the course of 11 years, Citibank took $14 million from thousands of dead or struggling customers by "sweeping" positive balances from their credit card accounts into the company's treasury, California officials said as it ended a three-year probe.

“The company knowingly stole from its customers, mostly poor people and the recently deceased, when it designed and implemented the sweeps,” said California Attorney General Jerry Brown. “When a whistleblower uncovered the scam and brought it to his superiors, they buried the information and continued the illegal practice.”

As part of a settlement, Brown's office said the bank agreed to refund the money to most of the 53,000 affected customers. The bank also will pay a $3.5 million penalty to California and 10 percent interest to state residents who lost funds.

According to the state, the bank used a computerized "credit sweep" from 1992 to 2003 on accounts in "recovery status," where a customer had died, sought bankruptcy protection or been the subject of collection efforts involving the bank.

A worker noticed the system and complained to superiors in July 2001, but was later fired for discussing the sweeps with an internal audit team, state officials said. The state quoted an unidentified bank official as saying "stealing from our customers is a business decision, not a legal decision." According to Brown's office, the same executive said the sweeping couldn't be stopped because it would reduce the executive bonus pool.

"We take issue with the state's characterization of our conduct," the bank said in a statement forwarded by Vice President Samuel Wang. But the statement didn't explain how the bank would characterize its own actions.

The bank acknowledged the program continued until 2003 and said the bank has been issuing refunds. "We of course are committed to treating our customers fairly," it said.