Bank Settles CFPB Charges for Discriminatory Credit Card Practices

A national bank settled CFPB charges for discriminating against persons of Armenian heritage applying for credit cards.

As described in the Order, the CFPB allegedly targeted individuals with last names ending in -ian or -yan in or around Glendale, California for discriminatory treatment under the perception that these applicants were high-risk for fraud and were likely to incur significant charges and then leave the country without paying. The CFPB determined that the bank violated the Equal Credit Opportunity Act ("ECOA") by discriminating against applicants based on national origin. Further, the CFPB found that the bank failed to provide an accurate and adequate statement for the specific reasons for adverse actions taken on credit card applications, also a violation of ECOA and Regulation B. The CFPB noted that the illegal activity was discovered through its review of national bank practices related to applications for certain private-label and co-branded consumer credit cards.

The bank agreed to (i) pay a civil money penalty of $24,500,000, (ii) reserve or deposit $1,400,000 into a segregated deposit account for the purpose of providing redress to affected consumers and (iii) create and implement a comprehensive compliance plan to ensure compliance with ECOA and the terms of the Consent Order. The bank also agreed to create and implement a comprehensive plan for providing redress to affected consumers. The CFPB said that the penalties were determined based on the systematic and persistent nature of the discriminatory practices over a period of at least six years.