Citi was ordered Wednesday to pay a $25.9 million fine for intentionally discriminating against Armenian American credit card applicants. The Consumer Financial Protection Bureau ordered the fine. File Photo by Ezio Petersen/UPI | License Photo
Nov. 8 (UPI) -- The Consumer Financial Protection Bureau ordered Citi to pay a $25.9 million fine Wednesday for intentionally and illegally discriminating against Armenian American credit card applicants.
"The CFPB found that Citi purposefully discriminated against applicants of Armenian descent, primarily based on the spelling of their last name," CFPB Director Rohit Chopra said in a statement. "Citi stereotyped Armenians as prone to crime and fraud. In reality, Citi illegally fabricated documents to cover up its discrimination."
Citi will pay $24.5 million in fines to the CFPB's victims relief fund. It will have to pay an additional $1.4 million directly to affected customers.
In a statement to UPI on Thursday, Citi said the actions were taken by a few employees and that it had taken measures to ensure it wouldn't happen again.
"Regrettably, in trying to thwart a well-documented Armenian fraud ring operating in certain parts of California, a few employees took impermissible actions," the statement said. "While we prioritize protecting our bank and our customers from fraud, it is unacceptable to base credit decisions on national origin. We sincerely apologize to any applicant who was evaluated unfairly by the small number of employees who circumvented our fraud detection protocols."
According to the CFPB, from at least 2015 through 2021 Citi treated Armenian Americans as criminals who were likely to commit fraud.
"Citi targeted retail services credit card applicants with surnames that Citi employees associated with Armenian national origin, as well as applicants in or around Glendale, Calif.," the CFPB statement said. "The bank specifically targeted surnames ending in '-ian' and '-yan.'
Nicknamed "Little Armenia," Glendale is home to about 15% of the U.S. Armenian American population.
Denying credit intentionally to entire groups of people based on national origin is illegal.
The CFPB said Citi denied credit based on borrower's ancestry and employees were instructed to avoid discussing the illegal discriminatory practice in writing or in recorded phone calls.
Citi also gave borrowers fake reasons for credit denials, the CFPB said.
In an example cited by the CFPB, a Citi employee asked for 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," the CFPB said.
In 2018, Citi paid $100 million after an investigation by 42 state attorneys general found fraudulent conduct in manipulating the LIBOR, a benchmark interest rate that set global lending rates.
In announcing that settlement, then-New York Attorney General Barbara Underwood said Citi made millions of dollars from the alleged fraudulent conduct.
In 2016, Citi also agreed to pay fines totaling $425 million for attempting to rig benchmark interest rates to resolve claims by the federal Commodities Futures Trading Commission.
This story has been updated to include comment from Citi.