WASHINGTON -- Synchrony Bank, formerly known as GE Capital, has reached an agreement with the Consumer Financial Protection Bureau and the Justice Department over allegations that it denied access to credit card debt-repayment programs to qualified customers just because they preferred to communicate in Spanish or had a mailing address in Puerto Rico.
The company will pay $169 million in relief to roughly 108,000 borrowers and get rid of negative credit reports against those customers as part of the agreement, which has yet to be approved in federal court. The bank will separately refund $56 million to customers subjected to deceptive marketing practices as part of an agreement with the CFPB.
The bank self-reported to the government its policy of denying Spanish-speaking customers and customers with mailing addresses in Puerto Rico access to the program, in violation of the Equal Credit Opportunity Act's ban on using national origin as a basis for discrimination.
Calling it the federal government's largest credit card discrimination settlement in history, the Justice Department said in a statement that "Hispanic borrowers experienced higher debt levels and longer periods of debt; some of these Hispanic borrowers may have suffered additional consequential economic damages, including increased risk of credit problems, default and repossession; having their accounts closed or 'charged-off' and sold to a third party; and other damages, including emotional distress" as a result of their exclusion from the program.
"The blatant discrimination that occurred here is unlawful and will not be tolerated," Jocelyn Samuels, acting assistant attorney general for DOJ's Civil Rights Division, said in a statement. "Borrowers have the right to credit card terms that do not differ based on their national origin, and the settlement today sends the message that the Justice Department can and will vigorously enforce the law against lenders who violate that right."
"Discrimination has no place in the consumer financial marketplace," CFPB Director Richard Cordray said in a statement. "No one should be excluded from credit opportunities simply because of where they live or the language they speak."