Citigroup employees called a group of about 80,000 Armenian Americans living near Los Angeles – the largest Armenian community outside the Armenian capital Yerevan – “bad guys” and secretly denied them fair access to the bank’s credit card products, shared the Consumer Financial Protection Bureau said in a statement on Wednesday.
The bank has agreed to pay $25.9 million to settle a case brought by the Consumer Bureau under the Equal Credit Opportunity Act. This is a federal law that prohibits banks from discriminating against people based on a variety of characteristics, including race, national origin and religion. Of the total, $1.4 million would go to victims of Citigroup’s discriminatory practices, the regulator said. The other $24.5 million is a penalty for the bank’s misconduct.
“Citi has identified Armenians as vulnerable to crime and fraud,” Rohit Chopra, the director of the consumer bureau, said in a news conference on Wednesday. “In reality, Citi illegally falsified documents to cover up its discrimination.”
Mr. Chopra said Citigroup had been caught violating banking regulations on multiple occasions. The consumer watchdog said Citigroup’s discriminatory practices against Armenians were carried out from at least 2015 to 2021.
“I am concerned about Citi’s long-standing problems managing the many parts of its sprawling business,” Mr. Chopra said.
According to the regulator, Citi employees described the community in Glendale, California, as a group whose members were likely to incur large amounts of debt and then flee the country. They warned new employees not to give credit card applicants with Armenian-sounding last names ending in “ian” or “yan” the same rates other customers received, and in some cases told them to reject those applicants altogether.
Those affected by the bank’s practice did not apply for Citigroup-branded cards; They looked for cards from retailers like Home Depot and Best Buy that were taken over by the bank. Eric Halperin, the consumer bureau’s enforcement director, said during the news conference that Citigroup is still trying to determine how many people are affected by the discrimination, but that regulators have identified “hundreds” so far.
Karen Kearns, a spokeswoman for Citigroup, said in a statement that the bank was “attempting to thwart a well-documented Armenian fraud ring operating in certain parts of California” and that “some employees took improper actions.”
According to regulators, Citi managers knew the exclusion of Armenians was illegal and warned employees “not to discuss it in writing or on recorded phone lines.” Still, regulators found evidence that Citi employees discussed via email how to cover up their rejection of Glendale applicants.
“It’s been a while since I’ve been declined due to possible credit abuse/YAN – give me a few reasons I can give,” one employee wrote to another in 2016, asking for advice on how to tell a potential customer that a credit card application was rejected without disclosing the true reason, according to the consumer agency.
“We sincerely apologize to any applicant who was assessed unfairly,” Ms Kearns said. “Following an internal investigation, we, along with those directly involved in this matter, took appropriate action and took immediate action to prevent such behavior from occurring again.”