Citi targeted Armenian Americans and treated them like criminals, US regulator alleges

New York (CNN) — Citibank illegally discriminated against Armenian Americans for years by singling them out on credit card applications based on their surnames, a federal regulator alleged on Wednesday.

The Consumer Financial Protection Bureau found that from at least 2015 through 2021, Citi “targeted” retail services credit card applicants whom employees associated with Armenian national origin.

“Citi treated Armenian Americans as criminals who were likely to commit fraud,” the CFPB alleged.

Citi applied more stringent criteria to suspected Armenian Americans’ applications, including “denying them outright,” placing blocks on the accounts and requiring additional information, according to the regulator.

The CFPB said Citi targeted applicants with last names ending in “-ian” and “-yan” as well as applicants in and around Glendale, California, which is home to a large Armenian American population.

Regulators painted the picture of an orchestrated effort by Citi to conceal the alleged discrimination, including by allegedly falsifying documents.

Citi is a major issuer of store credit cards, including retail cards for Home Depot, Best Buy and other chains.

To punish Citi for the alleged discrimination, the CFPB ordered the bank to pay $25.9 million in fines and consumer redress. Those penalties include a $24.5 million fine to the CFPB’s victims relief fund.

“Regrettably, in trying to thwart a well-documented Armenian fraud ring operating in certain parts of California, a few employees took impermissible actions,” Citi spokesperson Karen Kearns said in a statement to CNN. “While we prioritize protecting our bank and our customers from fraud, it is unacceptable to base credit decisions on national origin.”

The Citi spokesperson added that after an internal investigation, the bank took “appropriate actions” against those involved and imposed steps to prevent this from happening again.”We sincerely apologize to any applicant who was evaluated unfairly by the small number of employees who circumvented our fraud detection protocols,” the Citi spokesperson said.

According to the CFPB, Citi supervisors “conspired to hide the discrimination” by telling employees not to discuss these practices in writing or on recorded phone lines.

The bank then “hid” the discrimination by lying to consumers, giving them “false reasons” for credit denials, the CFPB said.

“Citi stereotyped Armenians as prone to crime and fraud,” CFPB Director Rohit Chopra said in a statement. “Citi illegally fabricated documents to cover up its discrimination.”

Under the Equal Credit Opportunity Act, it is illegal to intentionally deny credit to groups of people based on national origin.

Citibank should be held accountable, say consumer advocates

Sen. Elizabeth Warren, a frequent critic of big banks, condemned Citibank on Wednesday.

“Citibank’s intentional discrimination against Armenian Americans is illegal, outrageous and just plain wrong,” Warren, a Democrat from Massachusetts, told CNN in a statement. “The CFPB is right to hold the bank accountable.”

Dennis Kelleher, CEO of financial reform advocacy group Better Markets, called the allegations against Citi “stunning” and questioned whether the punishment fits the crime.

“That fine amount is meaningless to Citi,” Kelleher told CNN, noting it amounts to slightly more than 0.1% of the bank’s $20 billion in third-quarter revenue. “Individual bankers, including executives and supervisors, must be personally punished with meaningful fines and barred from working in the industry.”

During a call with reporters on Wednesday, Chopra said the people hurt thought they would be treated fairly by banks.

“Many Armenians have arrived in the US both because of opportunity but also because of physical dangers back home,” Chopra said, noting Armenia was a satellite of the Soviet Union before its collapse. “Those who immigrated to the United States should not be subjected to illegal discrimination on the basis of their national origin.”

The CFPB noted that Citi has a history of recently violating consumer financial protection laws. It paid $335 million in 2018 to 1.75 million consumer credit card holders for allegedly violating the Truth in Lending Act. In 2015, Citi paid almost $750 million for “deceptive and unfair practices” linked to overcharging credit card customers.

“I am concerned about Citi’s longstanding problems when it comes to managing its sprawling lines of businesses,” Chopra said. “The public has provided Citi with very large bailouts because of its past management failures. It is unfair for consumers to continue paying the price.”

Rep. Anna Eshoo, the only Armenian-Assyrian member of Congress, told CNN in a statement on Wednesday that her family members were turned away from a hotel in Fresno, Calif. in the early 1930s due to their last name.

“My relatives had no power to address the discrimination directed at them, but today, an agency I voted to create, the Consumer Financial Protection Bureau, has brought the justice needed,” Eshoo said, noting the penalties against Citi. “May their shocking behavior be relegated to the dustbin of history and never be forgotten for their fraud and deceit.”

Anthony Barsamian, co-chair of the Armenian Assembly of America, called Citi’s alleged discrimination “absolutely outrageous.”

“I’m just appalled,” Barsamian told CNN in a phone interview.

Barsamian, a trust and estate attorney in Massachusetts, said he’s been a Citibank customer for 20 years and even keeps client funds at the bank. Now, Barsamian said he is “absolutely” considering ending his business relationship with Citi.

Citi CEO Jane Fraser is scheduled to testify before Congress on December 6 as part of the Senate Banking Committee’s big bank oversight hearing.

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