Citibank Busted Issuing 3.5 million Credit Cards to People Who Never Even Applied

December 6, 2007 By Matthew Paulson

What would you think of a major bank opened up a credit card company opened an account in your name even though you never applied for the car? What if I told you that this practice was completely legal? It turns out that Citibank did exactly that and opened 3.5 million credit card accounts for “customers” who never even applied for their cards.

The way Citibank was able to pull this off legally is that they bought Macy’s credit card portfolio. If you open a credit card with a bank or retailer, they have the legal right to transform your card with them to another type of card if their program changes. A common example of this might be when a bank switches from issuing Visa Credit Cards to MasterCard Credit Cards. Citibank used this loophole to purchase 3.5 million inactive Macy’s credit accounts and then opened up Macy’s branded Citibank credit cards for the customers.

Citibank made a statement to the Boston Globe about this business practice. Their public relations people had the audacity to claim that they had received “positive feedback” from customers about these new cars and that there were no privacy or security issues to be concerned about.

The truth is that Citibank is opening up a second credit line for people without them ever asking. If you receive a new Citibank Macy’s branded credit card in the mail, your credit score will actually go down! Customers who receive one of these will likely perform a hard-credit pull and have the age of their card reduced significantly. These two factors could easily lower your credit score by 25 points or more.

If you receive one of these cards in the mail, don’t make use of it. It might even be a good idea to move your credit cards from Citibank over to another financial institution. Citibank needs to hear from consumers that they are not happy and will not stand for this practice.

Posted in banks, credit cards