Citigroup has been ordered to pay $25.9 million in fines and redress for illegally discriminating against Armenian Americans when they applied for credit cards.
Between 2015 and 2021 the bank singled out applicants suspected of being of Armenian descent based on their surnames, the Consumer Financial Protection Bureau alleged.
The federal regulator said some bank employees argued internally that Armenian Americans were more likely to commit fraud and referred to applicants as ‘bad guys’ or as affiliated with organized crime.
It also alleged supervisors conspired to hide the discrimination by instructing employees not to discuss the practices in writing or on recorded phone lines.
The CFPB found that Citi employees were trained to avoid approving applications with last names ending in ‘yan’ or ‘ian’ – the most common suffix to Armenian last names.
Citigroup has been ordered to pay $25.9 million in fines and redress for illegally discriminating against Armenian Americans when they applied for credit cards
The bank also targeted applicants in and around Glendale, California, which is home to a significant proportion of the country’s Armenian American population.
According to the watchdog, Citi applied much harsher criteria to suspected Armenian American’s applications for certain credit card products, including ‘denying them outright and requiring additional information or placing a block on the account.’
Borrowers were also given fake reasons for credit denials, the CFPB claimed.
When Citi denied credit applications because of applicants’ perceived Armenian national origin, Citi employees lied about the specific reasons for the adverse actions, it said.
At one point, a Citi employee explained it had been a while since they had discriminated against someone who they thought was Armenian, and wanted a suggestion on how to cover up the discrimination.
The response was to decline the credit card application due to suspected credit abuse, which essentially blamed the applicant for the denial, a statement from the regulator stated.
‘The CFPB found that Citi purposefully discriminated against applicants of Armenian descent, primarily based on the spelling of their last name,’ said CFPB Director Rohit Chopra.
‘Citi stereotyped Armenians as prone to crime and fraud. In reality, Citi illegally fabricated documents to cover up its discrimination.’
The agency’s findings focused on Citi’s retail services division, which houses the bank’s co-brand credit card partnerships with Home Depot, Best Buy and other chains.
Citi will pay $24.5 million in fines as well as $1.4 million in remedies to harmed customers.
CFPB officials said the case involves ‘hundreds of individuals’ who were impacted by Citi’s discrimination.
The origins of the case come as a result of some organized crime syndicates operating in Southern California that involve Armenian Americans.
Leaders of the Armenian crime rings have been charged with identity theft and other financial crimes, including stealing COVID-19 financial relief funds in recent years.
‘The CFPB found that Citi purposefully discriminated against applicants of Armenian descent, primarily based on the spelling of their last name,’ said CFPB Director Rohit Chopra (pictured)
Citi, based in New York, said a few employees were attempting to stop potential fraud due to this ‘well-documented Armenian fraud ring operating in certain parts of California’ that often involved individuals running up credit card debts, then leaving the country.
‘While we prioritize protecting our bank and our customers from fraud, it is unacceptable to base credit decisions on national origin,’ the bank said in a statement to DailyMail.com.
‘We sincerely apologize to any applicant who was evaluated unfairly by the small number of employees who circumvented our fraud detection protocols.
‘Following an internal investigation, we have taken appropriate actions with those directly involved in this matter and we promptly put in place measures to prevent any recurrence of such conduct.’
Under CEO Jane Fraser, Citi has been trying to overhaul its risk-management business across a firm that industry analysts still see as complicated and unwieldy, even 15 years after the financial crisis when Citi nearly failed.
Fraser has spun off banking franchises in several countries, and has discontinued several lines of business.
But regulators continue to express concerns about how Citi manages its business. The bank has been fined or cited several times by the CFPB, as well as by the Federal Reserve, for unsound business practices.
‘I am concerned about Cit’s longstanding problems when it comes to managing the many parts of its sprawling business,’ Chopra said in a news conference.
Senator Elizabeth Warren, who is a frequent critic of big banks, condemned the alleged actions.
‘Citibank’s intentional discrimination against Armenian Americans is illegal, outrageous and just plain wrong,’ she told CNN in a statement. ‘The CFPB is right to hold the bank accountable.’