The Consumer Financial Protection Bureau and the Department of Justice have fined the institution formerly known as GE Capital Retail Bank $228 million for deceptive marketing and discriminatory credit card practices.
GE Capital, which is now known as Synchrony Bank, must refund $56 million to approximately 638,000 consumers for deceptive marketing and $169 million to approximately 108,000 borrowers for the alleged discrimination, as well as a $3.5 million penalty.
Over the course of several years, GE Capital discriminated against Hispanic customers when it offered certain debt relief promotions. Telemarketers did not mention the promotions to customers who indicated that they preferred to communicate in Spanish or had a mailing address in Puerto Rico, the bureau said.
“The blatant discrimination that occurred here is unlawful and will not be tolerated. Borrowers have the right to credit card terms that do not differ based on their national origin,” said Jocelyn Samuels, acting assistant attorney general for the Civil Rights Division of the Department of Justice.
Bureau examiners also found that the bank used deceptive marketing practices for five of its debt cancellation add-on products. Telemarketers misrepresented products as free of charge, failed to disclose consumers’ ineligibility, failed to disclose that consumers were making a purchase and falsely described the products as a limited time offer, the CFPB said.
“These misleading tactics were compounded by the fact that consumers could not review the full terms of these products before enrolling in them, as the transactions occurred over the phone,” CFPB Director Richard Cordray said in a press call. “GE Capital has now ended its practice of enrolling consumers for credit card add-on products over the phone.”
The CFPB assessed a $3.5 million penalty for the company’s deceptive marketing. The bureau is not assessing a penalty for the discrimination because GE Capital self-reported the violation, self-initiated remediation for the harm done to affected consumers and fully cooperated with the investigation.
This is the third joint enforcement action issued by the CFPB and the Justice Department in relation to discrimination, and the sixth action issued by the CFPB related to credit card add-on products.
“We have been and will continue to be vigilant in taking action against those who deceive or discriminate against consumers,” Cordray said.