U.S. Trustee Program Announces Successful Conclusion Of Settlement With Citigroup Inc. To Protect Consumers’ Personal Information In Bankruptcy Cases

Under the settlement, Citi agreed to redact proofs of claim filed in bankruptcy cases nationwide in which the personal information of consumer debtors and third parties, including Social Security numbers and birthdates, had not been properly redacted by Citi as required by the bankruptcy rules. Also under the settlement, Citi agreed to notify all affected consumers and offer them one year of free credit monitoring and to change its internal practices and procedures so the redaction error does not recur. The settlement called for the appointment of a privacy expert to serve as independent auditor to review and certify the accuracy of the remediation process.

“It is important for creditors and other parties who file documents in consumer bankruptcy cases to understand their legal duty to protect certain personal information, and to take corrective action when they have not done so,” stated Executive Office for U.S. Trustees Director Cliff White. “This settlement helps to ensure that a bankruptcy filing does not make a consumer’s privacy protected information vulnerable to misuse by wrongdoers.”

Settlement Resolved U.S. Trustee’s Objection

The settlement resolved the U.S. Trustee’s objection to a motion filed by Citi admitting that personal information that should have been redacted under bankruptcy court rules had not been properly redacted when Citi’s subsidiaries filed bankruptcy proofs of claim seeking payment of amounts allegedly owed by debtors. The U.S. Trustee had objected to Citi’s motion because it did not provide public notice of the nationwide scope of the breach or mandate a verifiable solution to correct the problem and prevent its recurrence. The settlement between the U.S. Trustee and Citi was approved by the U.S. Bankruptcy Court for the Southern District of New York on March 13, 2012.

During the verification process mandated by the settlement, Citi discovered additional improperly redacted proofs of claim. Consequently, Citi prepared a plan of corrective action to include the redaction of approximately 50,000 additional bankruptcy filings. The U.S. Trustee also expanded the auditor’s duties to include a review and certification of Citi’s redaction policies and procedures to safeguard consumers and prevent recurrence of the redaction error.

In his report filed with the bankruptcy court on December 1, 2014, independent auditor Eric Dieterich of Sunera LLC concluded that Citi satisfied the requirements of the settlement and related corrective action plans. The auditor also concluded that, as required by the settlement, Citi instituted policies and procedures for future filings that are reasonably calculated to prevent recurrence of the redaction error.

The auditor’s final report is filed in In re Matter of Citi Replacement Filings, No. 11-00405 (Bankr. S.D.N.Y.).

The USTP is the component of the Department of Justice that protects the integrity of the bankruptcy system by overseeing case administration and litigating to enforce the bankruptcy laws.