Citi accused of discriminatory treatment towards Armenian Americans by US regulator
Citibank faces allegations of illegal discrimination against Armenian Americans, as they are accused of singling out applicants based on their surnames Advocates demand accountability for the bank's actions
Citibank has been accused of unlawful discrimination against individuals of Armenian descent for an extended period of time. According to a federal regulator, the Consumer Financial Protection Bureau, Citibank specifically identified and treated these applicants differently based on their last names when applying for retail services credit cards. This alleged targeting occurred between 2015 and 2021.
The CFPB claimed that Citi discriminated against Armenian Americans by regarding them as potential fraudsters. The regulator stated that Citi imposed stricter criteria on applications from suspected Armenian Americans, such as outright denials, account blocks, and requests for additional information.
Citi allegedly focused on applicants with last names that ended in "-ian" and "-yan," along with individuals residing in Glendale, California. The city has a significant population of Armenian Americans. Regulators revealed a strategic scheme employed by Citi to hide the discrimination, which involved the supposed falsification of documents.
Citi, a leading provider of retail credit cards for various chains such as Home Depot and Best Buy, has been instructed by the CFPB to pay $25.9 million in fines and consumer compensation as a consequence of the alleged discrimination. This includes a $24.5 million fine allocated to the CFPB's victims relief fund.
"Unfortunately, in our efforts to combat a well-documented Armenian fraud ring active in specific areas of California, a number of employees engaged in unauthorized actions," stated Karen Kearns, spokesperson for Citi, in response to CNN. "While our primary concern is safeguarding our bank and customers against fraud, it is unacceptable to make credit decisions based on an individual's country of origin."
An M&T Bank branch in downtown Hartford, Connecticut, US, on Wednesday, April 12, 2023.
Joe Buglewicz/Bloomberg/Getty Images
Regional banks' performance in Q3 remains a topic of inquiry amidst the impressive results of big banks. Following an internal investigation, Citi has taken appropriate measures against the individuals involved and has implemented safeguards to prevent any recurrence. Apologizing sincerely, the Citi spokesperson expressed remorse to any applicants who were unfairly assessed due to the actions of a small fraction of employees who bypassed their fraud detection protocols.
As per the CFPB, Citi supervisors colluded to conceal the discriminatory acts, instructing employees to refrain from written or recorded discussions regarding these practices. The CFPB further stated that the bank disseminated the discrimination by misleading consumers, providing them with false explanations for credit denials.
"Citi had a biased view of Armenians, associating them with criminal behavior and deceit," stated CFPB Director Rohit Chopra. "Furthermore, Citi unlawfully forged documentation to conceal its discriminatory practices."
According to the Equal Credit Opportunity Act, it is prohibited to intentionally refuse credit to individuals based on their national origin.
Citibank should be held accountable, say consumer advocates
Sen. Elizabeth Warren, a frequent critic of big banks, condemned Citibank on Wednesday.
Warren, a Massachusetts Democrat, criticized Citibank's intentional discrimination against Armenian Americans as unlawful, scandalous, and morally unjust. She expressed her support for the Consumer Financial Protection Bureau (CFPB) for taking action against the bank.
Dennis Kelleher, the CEO of Better Markets, a financial reform advocacy group, expressed shock at the accusations leveled against Citibank and raised concerns regarding the adequacy of the imposed sanctions in relation to the seriousness of the offense.
Citi does not consider the fine amount significant, as stated by Kelleher in an interview with CNN. He pointed out that the fine represents just over 0.1% of the bank's $20 billion third-quarter revenue. Kelleher emphasized the need for individual bankers, including executives and supervisors, to face substantial fines and be banned from operating in the industry.
In a conversation with reporters on Wednesday, Chopra stated that the affected individuals had trusted that the banks would treat them fairly.
On Tuesday, October 3, 2023, the US Consumer Financial Protection Bureau (CFPB) headquarters in Washington, DC, USA. Today, the Supreme Court will consider a unique constitutional argument that could potentially cripple the CFPB. Thirteen years ago, a Democratic-controlled Congress established the CFPB to regulate various consumer-finance products, particularly mortgages. Supporters of the bureau are concerned about the potential consequences of this argument.
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The fate of this consumer watchdog is in the hands of the Supreme Court
Chopra stated that numerous Armenians have migrated to the US due to both the potential for advancement and the inherent dangers they faced in their home country. He highlighted that Armenia was previously under the control of the Soviet Union before its dissolution. Moreover, he emphasized that individuals who have immigrated to the United States should not be subjected to unlawful discrimination based on their nationality.
According to the CFPB, Citi has a recent track record of violating laws implemented for safeguarding consumer financial interests. In 2018, the company offered a payment of $335 million to 1.75 million credit card holders for allegedly breaching the Truth in Lending Act. Additionally, in 2015, Citi paid approximately $750 million as a result of engaging in deceitful and unethical practices that resulted in overcharging credit card customers.
Chopra expressed concerns over Citis long-standing issues in effectively managing its extensive range of businesses. He highlighted that the public has contributed significant bailouts to Citi due to its previous failures in management. Chopra stated that it is unjust for consumers to bear the ongoing consequences. Meanwhile, Anthony Barsamian, co-chair of the Armenian Assembly of America, strongly criticized Citi for their alleged discriminatory practices, considering them completely unacceptable.
"I am absolutely appalled," Barsamian expressed in a phone interview with CNN.
A resident of Massachusetts and a trust and estate attorney, Barsamian has been a loyal Citibank customer for the past two decades, entrusting even his clients' funds to the bank. However, he is now seriously contemplating severing his business affiliation with Citi.
Citi CEO Jane Fraser is scheduled to testify before Congress on December 6 as part of the Senate Banking Committees big bank oversight hearing.
