SALT LAKE CITY (CN) - GE Capital Retail Bank, now known as Synchrony Bank, will pay $225 million to settle federal prosecutors' claims that it deceived consumers in credit card debt repayment programs or rejected them because they preferred to communicate in Spanish.
According to the settled complaint, filed June 18, the bank in 2012 "excluded borrowers with 'Spanish-preferred' indicators on their accounts or with mailing addresses in Puerto Rico from two credit card debt-repayment programs: the 'statement credit offer' and the 'settlement offer.'"
GE Capital rejected 108,000 borrowers "who had a 'Spanish-preferred' indicator on their accounts or a mailing address in Puerto Rico, the 8-page lawsuit states.
The Consumer Financial Protection Bureau investigated and referred the bank to Department of Justice.
"As a result of the exclusion, 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. They are aggrieved as defined in the Equal Credit Opportunity Act, 15 U.S.C. § 1691e, and have suffered injury and damages as a result of the bank's conduct," the complaint states.
Specifically, it states: "From at least March 2010 to March 2012, the bank implemented the 'statement credit offer' - a program offering borrowers a credit to their account if they met certain criteria. Under the offer, borrowers with (i) balances greater than $700, (ii) three payments past due, (iii) a credit bureau score below 670, and (iv) an amount due greater than $150 were eligible for a credit on their statement ranging from $25 to $100. The bank sent letters in English to eligible borrowers stating '[d]uring a quality assurance audit your account was identified to participate in an account credit offer. GE Capital Retail Bank would like to offer you an account credit.' To accept the statement credit offer, the borrower had to contact the bank and make three payments to bring the account current. The statement credit offer was discontinued by the bank in March 2012."
In a statement, the Justice Department called the discrimination "unacceptable."
Under the settlement, GE Capital will refund about $56 million to consumers who were subjected to its deceptive marketing, and $169 million who were denied debt relief because of their Spanish language preference or because they lived in Puerto Rico.