Prepared Remarks of CFPB Director Rohit Chopra on Press Call for CFPB’s Enforcement Action against Citi for Illegal Discrimination Targeting Armenian-Americans

NOV 08, 2023

In America, many of us have names that reveal our ancestry. This means that before someone even meets you, they can already know something about you.

Today, the CFPB is taking action against Citi, one of the globe’s largest banks, for intentionally and systematically discriminating against Americans of Armenian descent. Specifically, Citi targeted its discrimination at applicants whose surnames ended in “-ian” or “-yan,” and stereotyped them as likely to be engaged in fraud. In reality, Citi was the one engaged in a scheme to falsify documents sent to borrowers to cover up its discrimination. Citi even trained employees on how to avoid getting caught.

The CFPB is ordering Citi, the nation’s third largest bank, to pay more than $25 million in redress and penalties for violating federal law.

As part of its credit card business, Citi offers a number of credit cards in partnership with major retailers, like Home Depot and Best Buy.

Citi believed that Armenian-Americans were prone to engage in criminal fraud. Armenian-Americans commonly have last names with certain endings. Citi developed a scheme where the company would flag applicants with these last names. Citi also used applicants’ place of residence to guess national origin. The city of Glendale in California, which is widely known to have a large number of Americans of Armenian descent, was particularly impacted.

Citi often rejected these applicants outright. When Citi did not, the bank subjected those who may be of Armenian descent to additional scrutiny. The internal message to Citi employees was clear: root out Armenian-American applicants.

However, it was obvious that their denials based solely on national origin were illegal, so Citi supervisors conspired to cover up the discriminatory scheme, telling employees not to discuss the practice in writing or on recorded phone lines.

Citi also falsified documents. Under federal law, financial institutions are required to give a clear statement of reasons when they deny an applicant for credit. These are called adverse action notices. Our investigation uncovered that applicants of Armenian descent could fully meet the criteria for getting approved. In order to send them the required notice, Citi lied to the borrowers and fabricated the reasons for the denial. To further cover its tracks, Citi made it appear the denials were the fault of the applicants.

The people who were targeted by Citi are individuals who did not change their names and who thought they would be treated fairly by the bank they wanted to do business with. Many Armenians have arrived in the U.S. both because of opportunity but also because of physical dangers back home. Many Armenians have faced political repression and bloodshed. Those of who immigrated to the United States should not be subjected to illegal discrimination on the basis of their national origin.

Instead of considering legitimate factors such as the ability to repay, Citi institutionalized harmful stereotypes into its training materials and its evaluation of agents’ ratings, pay, and authority to approve applications. While companies must take steps to limit fraud, that should never be an excuse to violate federal consumer protection and fair lending laws.

For these reasons, the CFPB is ordering Citi to pay $1.4 million in redress to harmed consumers. Given the severity of the misconduct, the CFPB is also levying a $24.5 million penalty to be deposited into the CFPB’s victims relief fund. We have also ordered Citi to clean up its broken business practices that allowed this type of lawbreaking to occur. The CFPB’s order is not a suggestion.

For Citi, this is not the first time it has broken consumer financial protection laws. In 2018, Citi paid $335 million in restitution to 1.75 million consumer credit card holders for violating the Truth in Lending Act.¹ In 2017, Citi paid $6.5 million for deceiving student loan borrowers.² In 2016, Citi paid more than $7.5 million for illegal debt sales and collection practices.³ In 2015, Citi paid nearly $750 million for deceptive and unfair practices related to credit card add-on products.⁴

I am concerned about Citi’s longstanding problems when it comes to managing its sprawling lines of business. 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.

Today’s action makes clear that banks and other lenders, regardless of their size or political clout, cannot deny an individual’s application for credit merely based on their name and perceived national origin. The CFPB’s case against Citi shows that each person who applies for credit is entitled to fair, non-discriminatory consideration of their application.

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