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According to the CFPB, Citibank applied stricter criteria to applications from suspected Armenian Americans, including “outright rejection,” freezing the accounts and requesting additional information.
New York CNN –
A federal regulator alleged Wednesday that Citibank unlawfully discriminated against Armenian Americans for years by singling them out on credit card applications based on their last name.
The Consumer Financial Protection Bureau found that from at least 2015 to 2021, Citi “targeted” retail credit card applicants whose employees were associated with Armenian nationality.
“Citi treated Armenian Americans as criminals who were likely to commit fraud,” the CFPB alleged.
According to the regulator, Citi applied stricter criteria to applications from suspicious Armenian Americans, including “outright rejection,” blocking the accounts and requesting additional information.
The CFPB said Citi targeted applicants with last names ending in “-ian” and “-yan,” as well as applicants in and around Glendale, California, which has a large Armenian-American population.
Regulators painted a picture of an orchestrated effort by Citi to conceal the alleged discrimination, including by allegedly falsifying documents.
Citi is a major issuer of branch credit cards, including retail cards for Home Depot, Best Buy and other chains.
To punish Citi for the alleged discrimination, the CFPB ordered the bank to pay $25.9 million in fines and consumer protections. These penalties include a $24.5 million fine to the CFPB’s Victim Assistance Fund.
“Regrettably, some employees took improper actions to thwart a well-documented Armenian fraud ring operating in certain parts of California,” Citi spokeswoman Karen Kearns said in a statement to CNN. “While we prioritize protecting our bank and our customers from fraud, making credit decisions based on national origin is unacceptable.”
The Citi spokesperson added that following an internal investigation, the bank has taken “appropriate action” against those involved and has implemented fraud detection protocols to prevent something like this from happening again,” the Citi spokesperson said.
According to the CFPB, Citi’s supervisors “conspired to conceal discrimination” by telling employees not to discuss these practices in writing or on recorded phone lines.
The bank then “hidden” the discrimination by lying to consumers and giving them “false reasons” for denying credit, the CFPB said.
“Citi has identified Armenians as vulnerable to crime and fraud,” CFPB Director Rohit Chopra said in a statement. “Citi illegally falsified documents to cover up their discrimination.”
The Equal Credit Opportunity Act makes it illegal to intentionally deny credit to groups of people based on their national origin.
Senator Elizabeth Warren, a frequent critic of big banks, condemned Citibank on Wednesday.
“Citibank’s intentional discrimination against Armenian Americans is illegal, outrageous and simply wrong,” Warren, a Massachusetts Democrat, said in a statement to CNN. “The CFPB is right to hold the bank accountable.”
Dennis Kelleher, CEO of the financial reform advocacy group Better Markets, called the allegations against Citi “astonishing” and questioned whether the punishment fit the crime.
“This penalty is meaningless to Citi,” Kelleher told CNN, pointing out that it represented just over 0.1% of the bank’s $20 billion in third-quarter revenue. “Individual bankers, including executives and supervisors, must be personally punished with significant financial penalties and banned from operating in the industry.”
During a phone call with reporters on Wednesday, Chopra said the injured people thought they were being treated fairly by the banks.
“Many Armenians have come to the United States both because of the opportunity and because of the physical dangers in their homeland,” Chopra said, pointing out that Armenia was a satellite of the Soviet Union before its collapse. “Anyone who has immigrated to the United States should not face unlawful discrimination based on their national origin.”
The CFPB found that Citi has a history of violating consumer protection laws. In 2018, the company paid $335 million to 1.75 million consumer credit card holders for alleged violations of the Truth in Lending Act. In 2015, Citi paid nearly $750 million for “deceptive and unfair practices” related to overcharging credit card customers.
“I am concerned about Citi’s long-standing problems managing its sprawling businesses,” Chopra said. “The public gave Citi very large bailouts because of past management failures. It’s unfair that consumers continue to pay the price.”
Rep. Anna Eshoo, the only Armenian-Assyrian member of Congress, told CNN in a statement on Wednesday that her family members were turned away from a hotel in Fresno, California, in the early 1930s because of their last name.
“My relatives did not have the power to address the discrimination against them, but today an agency I voted to create, the Consumer Financial Protection Bureau, provided the justice they needed,” Eshoo said, citing the penalties against them Citi. “May their shocking behavior be relegated to the dustbin of history and never be forgotten for their fraud and deception.”
Anthony Barsamian, co-chair of the Armenian Assembly of America, called Citi’s alleged discrimination “absolutely outrageous.”
“I’m just horrified,” Barsamian told CNN in a telephone interview.
Barsamian, a trusts and estates attorney in Massachusetts, said he has been a Citibank customer for 20 years and even keeps client funds at the bank. Now Barsamian said he is “absolutely” considering ending his relationship with Citi.
Citi CEO Jane Fraser is scheduled to testify before Congress on December 6 as part of the Senate Banking Committee’s hearing on oversight of major banks.