U.S. settles credit discrimination suit against bank
Washington • GE Capital Retail Bank has agreed to pay $169 million to settle a lawsuit accusing it of discriminating against Hispanic credit card customers, the Justice Department said Thursday.
The Justice Department on Thursday called it the largest government credit-card discrimination settlement ever. The department joined the Consumer Financial Protection Bureau in announcing the agreement.
In addition, GE Capital must refund $56 million to about 638,000 consumers who were subjected to deceptive marketing practices to promote extra credit-card products known as "add-ons," in an agreement with the CFPB. The practices included falsely marketing products as free of charge, failing to tell consumers that they didn't qualify for the offers because they were retired or disabled, failing to make it clear that consumers were making a purchase and falsely telling them the offers were for a limited time only.
The $169 million settlement resolves allegations that the bank excluded Hispanic borrowers from two of its credit card debt-repayment programs. The programs allowed customers with delinquent accounts to settle their balances by paying off a specific portion of the debt. That denied a significant benefit to all customers who had expressed a preference to communicate with the bank in Spanish or had a mailing address in Puerto Rico even if they met the criteria for the programs, the government said.
The $169 million includes payments to roughly 108,000 borrowers who fell into those two categories. They were among a total of about 400,000 borrowers who received the offers.
The violations occurred between January 2009 and March 2012, according to the government.
"This kind of conduct has no place in the consumer financial marketplace," CFPB Director Richard Cordray said in a conference call with reporters. "People deserve to be given clear information and they deserve to be treated fairly."
The bank, which changed its name to Synchrony Bank earlier this month, said in a statement that it "regrets this error."
Synchrony's "priority is treating customers fairly and when issues are identified, it is committed to making it right," the bank said.
Synchrony, which is based in Stamford, Connecticut, discovered and voluntarily reported the violations to the CFPB, the government and the bank said.