GE Capital to Pay $169 Million to Settle Bias Claims

Sebastien Bozon, AFP/Getty Images
WASHINGTON -- General Electric's (GE) retail credit-card business has agreed to pay $169 million to settle a lawsuit that accused it of discriminating against Hispanic credit card customers, the Justice Department said Thursday.

The Justice Department called it the largest government credit-card discrimination settlement ever. The department joined the Consumer Financial Protection Bureau in announcing the agreement.

In addition, GE Capital Retail Bank must refund $56 million to about 638,000 consumers who were subjected to deceptive marketing practices to promote extra credit-card products known as "add-ons," in an agreement with the CFPB. The practices included falsely marketing products as free of charge, failing to tell consumers that they didn't qualify for the offers because they were retired or disabled, failing to make it clear that consumers were making a purchase and falsely telling them the offers were for a limited time only.

GE Capital also is paying a $3.5 million penalty to the CFPB for deceptive marketing.

The $169 million settlement resolves allegations that the bank excluded Hispanic borrowers from two of its credit card debt-repayment programs. The programs allowed customers with delinquent accounts to settle their balances by paying off a specific portion of the debt. That denied a significant benefit to all customers who had expressed a preference to communicate with the bank in Spanish or had a mailing address in Puerto Rico --€” even if they met the criteria for the programs, the government said.

The $169 million includes payments to roughly 108,000 borrowers who fell into those two categories. They were among a total of about 400,000 borrowers who received the offers.

The bank said it's already made most of the payments.

The violations occurred between January 2009 and March 2012, according to the government.

"This kind of conduct has no place in the consumer financial marketplace," CFPB Director Richard Cordray said during a conference call with reporters. "People deserve to be given clear information and they deserve to be treated fairly."

The CFPB said it found the deceptive marketing practices during a routine examination of the bank. GE Capital discovered the discrimination violations through its own internal audit process and voluntarily reported them to the CFPB, which alerted the Justice Department.

The bank, which changed its name to Synchrony Bank earlier this month, said in a statement that it "regrets this error."

Synchrony's "priority is treating customers fairly and when issues are identified, it is committed to making it right," said the bank, which is based in Stamford, Connecticut.

Increase your money and finance knowledge from home

Introduction to Preferred Shares

Learn the difference between preferred and common shares.

View Course »

What is Short Selling?

Make a profit when stocks prices fall.

View Course »

Add a Comment

*0 / 3000 Character Maximum


Filter by:

discriminating against Hispanic, first you have to find a hispanic who has a job...

June 20 2014 at 7:21 AM Report abuse +1 rate up rate down Reply

ok so now a business is gonna be forced to take customers that cant pay back the money they borrow? are you kidding? all these cry babies in society about crap like this would do the same if they had a business. Hipocrates

June 20 2014 at 6:51 AM Report abuse rate up rate down Reply

Stand in line...more money that TV lawyers will try to offer you. Like their high interest loans ,you have to watch out for the small lawyer print. Yuppies gone wild...

June 20 2014 at 6:50 AM Report abuse rate up rate down Reply

Thanks to the CFPB some of the "Banks" will act a little more correct. The Repubicans fought this Agency from the beginning. GE Capital also "lowered" my credit lines for pretty much no reason, I have been a good customer, paying "on-time". No wonder they changed their name, however we will not forget GE Capital. All of Congress and most rich people actually think we are stupid. I guess they will find out election time.

June 20 2014 at 6:25 AM Report abuse rate up rate down Reply