ASIC holds Citigroup to account on credit products

The Australian Securities and Investments Commission (ASIC) has responded to concerns from Citigroup customers about potentially misleading telephone sales practices.

Citigroup received 174 complaints from cardholders relating to the sale and promotion of credit insurance products Creditshield and Creditshield Plus during phone calls placed by cardholders to activate new or replacement credit cards between August 2008 and January 2009.

After reviewing selected recordings of these calls, ASIC determined that the Creditshield products were being sold to customers who had clearly refused to purchase the product, who had agreed only to receive more information about the product, or who mistakenly believed that they were not committing to purchase the product during the cooling off period.

ASIC identified potentially misleading statements during the sales calls, such as the use of the word ‘activate’ in reference to the Creditshield products rather than the ‘card activation’, or the statement “Creditshield is free if you pay your bills” leading consumers to incorrectly believe the product would be free if they paid their credit card in full each month.

ASIC also determined the telephone operators persisted with the attempted sale after customers said “no” as many as three or more times, and they kept the customers on the phone by delaying the card activation until the attempted sale had been completed.

Citigroup has been cooperating fully with ASIC and had already taken steps to address these issues before ASIC’s involvement, including the termination of some telephone sales agents, according to ASIC.

Citigroup has now made several changes to the script used by the telephone operators, such as using the word “purchase” rather than “activate” to refer to the product and concluding the initial purpose if the call before attempting to sell another product.

Citigroup is now asking all customers who purchased Creditshield during this period to ensure that they are aware of the purchase and the product’s terms and conditions.

Customers who were not aware of the purchase or the product’s terms and conditions are being asked to contact Citigroup to resolve these concerns, which may include a potential refund of the product.