GE Capital to Pay $225 Million for Discriminatory and Deceptive Credit Card Practices
The Consumer Financial Protection Bureau has cracked down on yet another credit card issuer.
Today, the CFPB and the Justice Department ordered GE Capital Retail Bank, General Electric’s retail credit card business, to pay $225 million in relief to consumers harmed by illegal and discriminatory credit card practices. This represented the largest credit card discrimination settlement in U.S. history.
This was the sixth bank or credit card issuer fined by the CFPB for illegal credit card practices. Previous fines have been levied against Bank of America (in April 2014 for $772 million), JP Morgan Chase (in September 2013 for $309 million), American Express (in October 2012 for $112.5 million), Discover (in September 2012 for $214 million) and Capital One (in July 2012 for up to $210 million).
GE Capital Retail Bank, which recently changed its name to Synchrony Bank, must refund $56 million to nearly 638,000 consumers who were subjected to deceptive marketing practices of add-on products and services on their credit card accounts. The Bureau found that GE Capital’s telemarketers misrepresented these products to consumers in four ways: by failing to disclose a consumer’s ineligibility; by failing to disclose that consumers were making a purchase; by marketing the products as a limited time offer when they were not; and by marketing the products as free when they could only avoid the fees under very limited circumstances.
In addition, the bank has to pay another $169 million to approximately 108,000 Spanish-speaking consumers for excluding them from offers to help them with their debt based on their national origin. In recent years, GE Capital offered two different promotions allowing credit card customers with delinquent accounts the chance to settle their balances by paying off a certain portion of their debt. But the bank did not extend these offers to any customer who indicated a preference to communicate in Spanish or had a mailing address in Puerto Rico, even if the customer met the promotion’s qualifications. This discrimination was a violation of the Equal Credit Opportunity Act.
“We will continue to take action against marketing tactics that trick consumers into buying credit card products they do not want or cannot use,” said CFPB Director Richard Cordray in a statement. “Consumers also deserve to be treated fairly no matter where they live or what language they speak.”