Citi agreed to pay $25.9 million in fines and redress as part of a settlement with the Consumer Financial Protection Bureau (CFPB) addressing allegations the bank discriminated against credit card applicants identified as Armenian American.
The CFPB ordered the bank to pay a $24.5 million fine and provide an additional $1.4 million to affected customers over a six-year span, the agency announced in a press release Wednesday. The CFPB cited the bank for violating the Equal Credit Opportunity Act (ECOA).
Citi described its actions as an attempt to thwart an Armenian fraud ring gone wrong. The bank apologized to individuals wrongly evaluated.
The details: From at least 2015 through 2021, Citi managers trained and directed employees to single out and deny Armenian American credit card applicants, according to the CFPB. The bank specifically targeted surnames ending in “-ian” and “-yan,” the agency said, and its alleged practices primarily impacted the city of Glendale, Calif., where approximately 15 percent of the Armenian American population in the United States resides.
In the agency’s release, CFPB Director Rohit Chopra said Citi acted off stereotypes Armenians are prone to crime and fraud. He criticized the bank for steps it took to cover up its alleged discriminatory practices, including managers instructing employees not to discuss the alleged activities in writing or on recorded phone lines.
“When Citi identified credit card applicants as potentially being of Armenian national origin, the bank applied more stringent criteria to their applications, including denying them outright and requiring additional information or placing a block on the account,” the CFPB said. “… Citi employees lied about the specific reasons for the adverse actions,” including allegedly blaming certain declinations on suspected credit abuse.
Compliance considerations: Citi agreed to implement a plan designed to ensure compliance with the ECOA and must update the CFPB on its actions taken, according to the agency’s order.
In a statement, Chopra was critical of the bank’s recent run of alleged violations of consumer protection law, citing a handful of enforcement cases from 2015-18.
“I am concerned about Citi’s longstanding problems when it comes to managing its sprawling lines of business,” said Chopra. “The public has provided Citi with very large bailouts because of its past management failures. It is unfair for consumers to continue paying the price.”
Bank response: “Regrettably, in trying to thwart a well-documented Armenian fraud ring operating in certain parts of California, a few employees took impermissible actions,” said Citi in an emailed statement. “While we prioritize protecting our bank and our customers from fraud, it is unacceptable to base credit decisions on national origin.
“We sincerely apologize to any applicant who was evaluated unfairly by the small number of employees who circumvented our fraud detection protocols. Following an internal investigation, we have taken appropriate actions with those directly involved in this matter, and we promptly put in place measures to prevent any recurrence of such conduct.”