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Citigroup employees labeled a group of about 80,000 Armenian-Americans living near Los Angeles — the largest Armenian community outside Yerevan, the Armenian capital — as “bad guys” and secretly denied them fair access to the bank’s credit card products , according to 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, the federal law that prohibits banks from discriminating against people based on a wide range of qualities , including race, national origin, and religion. Of the total, $1.4 million will go to victims of Citigroup’s discriminatory practices, the regulator said. The remaining $24.5 million is a fine for the bank’s misconduct.
“Citi has stereotyped Armenians as prone to crime and fraud,” Rohit Chopra, the director of the consumer agency, said at a news conference on Wednesday. “In reality, Citi illegally produced documents to cover up its discrimination.”
Mr. Chopra said Citigroup has been caught violating banking rules several times. The consumer regulator said Citigroup’s discriminatory practices against Armenians were in place from at least 2015 to 2021. “I am concerned about Citi’s long-standing problems in managing the many parts of its sprawling business,” Mr. Chopra said.
According to the regulator, Citi employees labeled the Glendale, California, community as a group whose members were likely to incur massive debt and then flee the country. They warned new hires not to give credit card applicants with Armenian-sounding last names ending in “ian” or “yan” the same rates as other customers, and in some cases urged them to reject these applicants altogether.
The people affected by the bank’s practices did not apply for Citigroup-branded cards; they were looking for cards offered by retailers, such as Home Depot and Best Buy, that were bank-endorsed. Eric Halperin, the consumer agency’s enforcement director, said at the news conference that Citigroup was still trying to determine how many people were affected by the discrimination, but so far regulators had identified “hundreds.”
Karen Kearns, a spokeswoman for Citigroup, said in a statement that the bank “attempted to thwart a well-documented Armenian fraud ring operating in certain parts of California” and that “a few employees took impermissible actions.”
According to regulators, Citi managers knew that excluding Armenians was illegal and warned employees “not to discuss this in writing or on recorded phone lines.” Still, regulators found evidence that Citi employees discussed via email how to cover up their denial of applicants from Glendale.
“It’s been a while since I declined due to possible credit abuse/YAN – give me a few reasons I can use,” one employee wrote to another employee in 2016, seeking advice on how to tell a potential customer that a credit card application had been rejected without disclosing the real reason, the consumer agency said.
“We sincerely apologize to any applicant who has been assessed unfairly,” Ms Kearns said. “Following an internal investigation, we have taken appropriate action with those directly involved in this matter, and we have taken immediate action to prevent a recurrence of such behavior.”
