A now-terminated consent order against Citi resulted in redress payments to customers who were “not in any way affected” by the order’s cause, according to Consumer Financial Protection Bureau Acting Director Russ Vought.
Vought penned a letter this week to Sen. Adam Schiff, D-CA, who last month requested information on why a 2023 consent order against Citi, which he called proof of “outrageous overreach,” was terminated three years ahead of schedule.
The consent order alleged that from 2015 through 2021, Citi denied applicants certain credit card products based on their surnames, whom the firm suspected of being of Armenian descent due to surnames ending in “ian” or “yan.” Citi then allegedly tried to cover up the discrimination by instructing employees not to discuss the practices in writing or on recorded phone lines, the CFPB said at the time.
But in a letter seen by Banking Dive, Vought called the instances “rogue conduct by a few underwriters at one location.”
“As soon as Citi learned of these isolated occurrences via the CFPB's investigative demand in July 2020, Citi terminated the employees,” Vought wrote. “Citi also undertook re-training of all the underwriting staff and began monitoring employees' communications to ensure that their decision-making was not improperly influenced by the applicant's Armenian national origin.”
The affected applications were small enough in number that “the impact was not even detectable in any statistical analysis,” Vought said. Of the 573 individuals who were sent redress, more than 100 were not Armenian, according to Vought, including people with the last name “Christian” or “Bryan.”
Citi paid a civil monetary penalty of $24.5 million, completed its redress obligations, and developed a plan to achieve compliance with all requirements of the order, according to Vought.
“There are no unfulfilled obligations as of the date of termination, and Citi committed to ongoing monitoring regardless of termination,” he wrote. “Accordingly, there was no reason to continue the order.”
The civil penalty, Vought wrote, was “draconian” and “outsized,” 17 times the amount of redress.
Of the 573 redress checks sent to affected consumers, 126 were not cashed. Those funds were redistributed amongst the 447 consumers who cashed their initial redress checks, according to Vought. All in, Citi paid $1,370,207.16 to affected customers.
A spokesperson for Citi declined to comment.
A spokesperson for Schiff did not immediately respond to a request for comment.
