Citi fined $25.9M for discriminating against Armenian Americans after government probe
Citibank systematically discriminated against Armenian Americans for six years, the Consumer Financial Protection Bureau said Wednesday, and now has to pay $25.9 million in fines and consumer redress.
The government watchdog said that from 2015 to 2021, Citi “treated Armenian Americans as criminals who were likely to commit fraud.” Citi managers trained and directed employees to target retail services credit card applicants based on their surnames and area of residence. Those living in or around Glendale, Calif., which is home to 15% of Armenian Americans in the US, were singled out for rejection.
The actions are a violation of the Equal Credit Opportunity Act, the CFPB noted, as applicants were denied services based on their nationality. Now, the nation’s third-largest bank has to pay $1.4 million to harmed consumers — along with a $24.5 million fine to the CFPB’s victims relief fund.
“Armenian-Americans commonly have last names with certain endings. Citi developed a scheme where the company would flag applicants with these last names,” CFPB director Rohit Chopra, said in a statement. “Citi also used applicants’ place of residence to guess national origin.”
Chopra added: “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.”
In response to the announcement on Wednesday, Citigroup issued an apology, indicating that a small group of employees took “impermissible actions” in an attempt to thwart fraud surrounding a “well-documented Armenian fraud ring operating in parts of California.”
“We sincerely apologize to any applicant who was evaluated unfairly by the small number of employees who circumvented our fraud detection protocols,” Citigroup said in a statement provided to the press. “Following an internal investigation, we have taken appropriate actions with those directly involved in this matter and we promptly put in place measures to prevent any recurrence of such conduct.”
The court order said the practice of discrimination affected credit card applicants, including those seeking a new credit card or a credit line increase on an existing card because these were “subject to manual underwriting” by certain employees from Citi’s retail services unit.
Court documents said any employees or agents who have the authority to approve or deny a credit card, those who assist or supervise those employees or agents, and those involved in risk detection, compliance, or fraud prevention related to credit cards were under review.
According to the court order, some Citi employees referred to these applicants as “Armenian bad guys” or the “Southern California Armenian Mafia.”
The CFPB noted that Citi employees purposefully barred applicants with a last name ending in -ian or -yan and addresses known to have a high concentration of Armenian Americans. These disparities in underwriting were “highly unlikely to have occurred by chance.”
The CFPB also said that Citi supervisors “conspired to hide the discrimination” by instructing employees to avoid discussing discriminatory practices in writing or on recorded phone lines. Citi employees also lied to denied applicants about their basis of denial.
“At one point, a Citi employee explained it had been a while since they had denied an application because of a consumer’s Armenian surname, and wanted a suggestion on how to cover up the discrimination,” the CFPB said. “The response was to decline the credit card application due to suspected credit abuse, which essentially blamed the applicant for the denial.”
“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,” Chopra said. “The CFPB’s case against Citi shows that each person who applies for credit is entitled to fair, non-discriminatory consideration of their application.”
Gabriella is a personal finance and housing reporter at Yahoo Finance. Follow her on Twitter @__gabriellacruz.
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