US Consumer Financial Protection Bureau Fines Citi $25.9m For Armenian Discrimination

The US Consumer Financial Protection Bureau (CFPB) has fined Citi $25.9m for singling out Armenian Americans based on their surnames when they applied for credit cards.

Citi will pay a $24.5m penalty to the CFPB’s victims relief fund and a further $1.4m in consumer redress.

According to the regulator, Citi singled out Armenians based on their surnames, denied their application for certain private-label and co-branded consumer credit cards, and lied about the reasons for denial.

Between at least 2015 and 2021, Citi employees specifically targeted surnames ending in “-ian” and “-yan,” especially if the applicant’s address was in or around Glendale, California.

Glendale is home to one of the largest Armenian communities outside of Armenia. According to dataUSA.io, Armenian is the most frequent non-English speaking language in Glendale — with 66,728 households, Armenians make up nearly 36 percent of the city’s population.

CFPB director Rohit Chopra said Citi discriminated against Armenians whom it stereotyped as customers “prone to crime and fraud”.

The consent order shows that Citi employees sometimes referred to Armenian Americans as “bust outs”, because it believed Armenians are more likely to make significant charges and then “bust out” of the country or otherwise not pay off the charges.

Some employees referred to these applicants as “Armenian bad guys” or the “Southern California Armenian Mafia.”

Ultimately, Citi denied credit card applications by Armenians more often than to other applicants in similar positions, which the regulator said could not be explained “by a legitimate, non-discriminatory reason”.

Employees who failed to identify and deny applications that met those criteria faced “corrective actions” from the bank, the regulator noted.

“Intentionally denying credit to entire groups of people based on national origin is unlawful,” the regulator emphasised.

Citi supervisors then helped cover up the discrimination warning employees not to discuss the discriminatory practices in writing or on recorded phone lines. Citi staff also helped each other to cover up the discriminatory practices with lies.

For instance, the regulator found that in 2016, a Citi employee asked for help from a colleague saying “it’s been a while since I declined for possible credit abuse/YAN — gimme some reasons I can use.”

After receiving several “pretextual” reasons, the employee denied the application “due to possible credit abuse”.

In addition to the controversial denials, the CFPB listed a number of other practices that it considered discriminatory, such as “applying additional scrutiny” and “referring the applicant to [Citi’s] fraud prevention units for further review”.

According to U.S. News, Citi is the third largest credit card issuer in the US, processing $563.4bn in payments on credit cards. It follows only Chase and American Express (AmEx), which process $1.14trn and $1.03trn, respectively, in their credit card businesses.

Citi has $1.7trn in total assets, making it the third-largest bank by asset size in the US.

The bank’s spokesperson said Citi “sincerely apologises” to any applicant who was evaluated unfairly, emphasising that this practice was carried out by a “small number of employees who circumvented our fraud detection protocols”.

“Regrettably, in trying to thwart a well-documented Armenian fraud ring operating in certain parts of California, a few employees took impermissible actions,” the spokesperson told Vixio.

“While we prioritise protecting our bank and our customers from fraud, it is unacceptable to base credit decisions on national origin,” the bank added.

Citi assured that after an internal investigation, the bank took “appropriate actions” with those directly involved in this matter and “promptly put in place measures to prevent any recurrence of such conduct.”