The settlement with the Consumer Financial Protection Bureau is over discrimination against Hispanic customers and practices used to sell credit card add-ons.
In the largest credit card discrimination settlement in U.S. history, the Consumer Financial Protection Bureau has ordered GE Capital Retail Bank to fork over $225 million in relief to customers for discrimination and illegal credit card practices, The Wall Street Journal says.
GE Capital, which recently changed its name to Synchrony Bank, is accused of excluding about 108,000 Spanish-speaking customers from two debt-relief offers. That big mistake came with a pretty hefty price tag: A total of $169 million will be paid out to those customers. The refund will either come in cash or a reduction on customers’ credit card balances.
Acting assistant attorney general Jocelyn Samuels said in a conference call with reporters that the Spanish-speaking customers were “denied a significant financial benefit provided to other customers,” the WSJ reported.
The bank will also refund about $56 million to 638,000 customers to settle allegations that it used deception to get people to purchase credit card add-ons and services. The WSJ reported:
The company’s telemarketers “often did not make it clear that consumers were actually purchasing these products,” said CFPB director Richard Cordray. “They made it seem like the consumers were updating their accounts or that the telemarketers were handling other administrative tasks.”
According to CNN Money, GE Capital said it was proactive and self-reported the discrimination issue to the CFPB.
“The bank identified this matter through its own internal audit, promptly reported it to the CFPB, and commenced a remediation,” the bank said in a statement. “The bank regrets this error. Its priority is treating customers fairly and when issues are identified, it is committed to making it right.”
Although this is just the second time the CFPB has gone after a bank for discrimination, it’s the sixth time the government watchdog has taken action against a credit card company for illegal practices regarding add-ons.