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Terms of Citibank credit insurance not well disclosed

Citi's Credit Protector Program promises to safeguard people who lose their jobs by temporarily freezing payments to their credit card accounts. But a key rule isn't clearly spelled out.

November 10, 2011|David Lazarus
  • A Citibank branch in New York is shown in October. The bank's Credit Protector Program promises to safeguard people who lose their jobs by freezing payments to your Citi account for up to two years.
A Citibank branch in New York is shown in October. The bank's Credit… (Mark Lennihan, Associated…)

Insurance is one of those products you hope you never have to use. But if you do have to, you expect it to be there for you when you need it.

At the very least, you don't want your insurer throwing curveballs at you with a lot of rigmarole about terms and conditions that you weren't even told about in the first place.

That's the situation Dudley Johnson, 57, of Altadena found himself in after trying to get Citibank to make good on its Credit Protector Program, which promises to safeguard people who lose their jobs by "freezing payments to your Citi account for up to two years."

In other words, you'll have as much as two years before you have to make any payments to your Citi credit card account, and you won't face any penalty fees or higher interest rates while you're out of work.

It's a form of insurance that most major banks offer. In Citi's case, the cost of its Credit Protector Program is 85 cents for every $100 in your credit card balance for each billing period.

Johnson, a freelance producer, was carrying a balance of about $26,000 on his Citi card, an amount that's steadily grown as he's gone more than a year without work. He thus paid more than $200 a month for the bank's credit protection.

Johnson tried for as long as possible to not use the service, not wanting to do anything that would affect his credit score. He also believed that he'd land a gig sooner or later.

Finally, Johnson accepted that he needed help.

"I was running out of money," he told me. "My mother was sick and I had to help with her bills. I needed to delay or make lower card payments for a while."

But when he contacted Citi to take advantage of the protection he'd been paying for, Johnson was told that he wasn't eligible for assistance. Why? Because he'd failed to notify the bank of his joblessness within six months of losing work.

A subsequent letter from Citi hammered the point home.

"The Terms and Conditions state we must be notified of an event within 180 calendar days after the event occurred," it said. "Since we were not notified of your job loss event within the required time frame, we are unable to consider that event for Credit Protector benefits."

First of all, "job loss event"? Who talks like that?

More to the point, Johnson said he couldn't recall ever being told about the six-month rule when he signed up for the insurance plan.

He's got a good point there. If you go to the website for Citi's Credit Protector Program, you'll find numerous links to a summary of the service's benefits, eligibility requirements and limitations.

There's a link to the program summary on the main page. If you click the "enroll now" button, there are no fewer than six links on the very next page guiding you to the program summary.

But nowhere in the more than 1,400-word program summary is there any mention of the requirement that your job loss (eventful or otherwise) be reported within 180 calendar days. It's just not there.

Maybe there are more voluminous terms and conditions that become available once you sign up for the plan, but it hardly seems fair to withhold such important information until after you've bought the product.

Emily Collins, a Citi spokeswoman, acknowledged that disclosure of the 180-day rule isn't in the program summary. But she said customers can find out about it on the site's page for frequently asked questions.

Not really.

Clicking the main page's link for FAQs brings you to a page with links to eight questions, including "How does activating Credit Protector affect my account?" and "If I have zero balance on my card, am I charged a fee?"

The only mention of the 180-day rule on the entire website, as best as I can tell, comes if you click the question for "How do I activate Credit Protector benefits?" Doing so produces a phone number you can call "to report your situation within 180 days of its occurrence." That's it.

The obvious follow-up question — what if I don't report my situation within 180 days of its occurrence? — isn't addressed, nor is there a clear admission that failing to do so will result in a loss of benefits.

Meanwhile, the FAQs contain four different links back to the program summary for those seeking "benefit details."

If this isn't a deliberate effort to obfuscate an important point, it's a model of how not to communicate a key contract condition to customers.

Collins said the 180-day rule is spelled out in the terms and conditions included in the "welcome kit" that customers receive after enrolling in the program. But, of course, you won't see those terms and conditions until you sign up.

I asked if Citi feels that it's adequately disclosing this particular condition so that people can make informed decisions about whether to enroll in Credit Protector.

"Citi feels that customers are told of this in multiple places," Collins replied.

Even so, she said, Johnson's Credit Protector service will be activated despite his missing the 180-day cutoff "as a gesture of goodwill."

I conveyed that to Johnson. He was glad that Citi was doing the stand-up thing, but not very impressed by the company's rationale.

"It doesn't seem like goodwill," Johnson said. "I've been paying a lot of money for this."

Citi can avoid such situations in the future by doing what it should have done in the first place: clearly letting people know about all its rules.

Last time I checked, though, the 180-day restriction was still a well-kept secret.

David Lazarus' column runs Tuesdays and Fridays. He also can be seen daily on KTLA-TV Channel 5. Send your tips or feedback to david.lazarus@latimes.com.

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