WASHINGTON, D.C. — (Mealey’s) The Department of Justice (DOJ) and the Consumer Financial Protection Bureau (CFPB) today announced a settlement to resolve allegations that GE Capital Retail Bank, known as of this month as Synchrony Bank, “engaged in a nationwide pattern or practice of discrimination by excluding Hispanic borrowers from two of its credit card debt-repayment programs,” the federal government’s largest credit card discrimination settlement ever, according to the DOJ (United States of America v. Synchrony Bank, formerly known as GE Capital Retail Bank, No. 14-0454, D. Utah).
The settlement resolves claims that GE Capital violated the Equal Credit Opportunity Act (ECOA) by excluding borrowers who indicated that they preferred communications to be in Spanish or had a mailing address in Puerto Rico from two credit card debt repayment programs, the DOJ said in a press release.
“The settlement provides $169 million in relief to approximately 108,000 borrowers in the form of monetary payments and the reduction, or complete waiver, of borrowers’ credit card balances,” the DOJ said. “GE Capital itself identified and reported the discrimination to the CFPB, was proactive in taking steps toward providing relief to affected borrowers, and has worked closely with the department and the CFPB to further identify and compensate victims of the discrimination. Specifically, GE Capital has already provided the benefits of the offers or their equivalent value to approximately 84,000 borrowers, totaling $131.8 million in relief. Following the settlement, the bank will provide the remaining $37 million in payments, reductions and waivers to affected borrowers.”
‘Higher Debt Levels’
The settlement was filed today by Synchrony Bank and the U.S. government in the U.S District Court for the District of Utah in conjunction with a complaint filed by the government. The settlement is subject to District Court approval.
In the complaint, the government alleges that from January 2009 to March 2012, GE Capital excluded certain borrowers, because of their national origin, from the “Statement Credit Offer,” a program offering eligible borrowers a credit to their account if they met certain criteria, and the “Settlement Offer,” a program offering eligible borrowers the chance to settle their credit card debt if they paid a percentage of their remaining account balance, ranging from 25 percent to 55 percent.
“As a result of the exclusions, 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,” the DOJ said in the press release.
The press release can be viewed online at www.justice.gov/opa/pr/2014/June/14-crt-649.html.
The government is represented by Daniel D. Price of the U.S. Attorney’s Office in Salt Lake City.
Synchrony Bank is represented by James D. Gilson of Callister Nebeker & McCullough in Salt Lake City.
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