Citibank pays $25.9M for national origin discrimination
On November 8, 2023, the CFPB issued a stipulated consent order to Citibank, N.A., for payment of a $24.5 million civil money penalty and $1.4 million in consumer redress for engaging in a pattern or practice of discrimination against certain applicants based on Armenian national origin in violation of the Equal Credit Opportunity Act (ECOA), and Regulation B, and failing to provide applicants with an accurate and adequate statement of the specific reasons for the adverse action when the applicant was denied based on Armenian national origin in violation of ECOA and Regulation B, both of which violations also violate the Consumer Financial Protection Act.
The consent order states:
- From at least 2015 through 2021, it was Respondent’s pattern or practice to apply extra scrutiny to, negatively assess, and often deny certain credit card
applications based on Armenian national origin.
- Respondent employees used the applicant’s last name ending in -ian or -yan, especially if the applicant’s address was in or around Glendale, California, to identify for discriminatory treatment applicants they associated with Armenian national origin.
- Respondent employees suspected that applicants with last names ending in -ian or -yan, especially if the applicant’s address was in or around Glendale, California, were more likely to commit fraud and referred to them as “bust outs” because the employees perceived them as likely to incur significant charges and then “bust out,” meaning they would leave the country or otherwise not pay off the charges. Some Respondent employees referred to these applicants as “Armenian bad guys” or the “Southern California Armenian Mafia.”
- As a result of Respondent’s pattern or practice of discrimination, Respondent more frequently denied credit to applicants based on Armenian national origin, as compared to other similarly situated applicants. Respondent’s pattern or practice of discrimination is not explained by a legitimate, non-discriminatory reason.
- This pattern or practice of discrimination affected credit card applicants, including those seeking a new credit card or a credit line increase on an existing credit card, who were subject to manual underwriting by Respondent’s Citi Retail Services unit.
- Citibank took corrective action against employees if they failed to identify and deny Applications if the applicant’s last name ended in -ian or -yan and address was in or around Glendale, California, including action that
could affect the agent’s performance rating, pay, and authority to approve future Citi Retail Services Credit Card Applications.
- Citibank supervisors and trainers instructed Respondent employees to conceal their reliance in the credit decision on applicants’ last names ending in -ian or -yan and addresses in or around Glendale, California, including by telling Respondent employees not to discuss it in writing or on recorded phone lines.
- Citibank did not have a legitimate, non-discriminatory explanation for its pattern or practice of applying extra scrutiny to, negatively assessing, and often denying Applications for Citi Retail Services Credit Cards if the applicant’s last name ended in -ian or -yan or address was in or around Glendale, California, and to the extent that Respondent identified purportedly legitimate, non-discriminatory reasons for denying such Applications, those reasons were pretextual justifications for denying the Applications based on the national origin Respondent attributed to the applicant.
- When Citibank denied a Citi Retail Services Credit Card Application based on the applicant’s Armenian national origin, Citibank failed to inform the applicant accurately and adequately of the reason for the action in the adverse action notice as required by 15 U.S.C. § 1691(d) and 12 C.F.R. § 1002.9(a)-(b).