CFPB Enters Consent Order With Credit Card Company Over Discriminatory Practices

CFPB  •  Credit Cards  •  ECOA

​On August 23, 2017, the Consumer Financial Protection Bureau (CFPB) announced that it had entered a consent order with two subsidiaries of a multi-bank holding corporation and global provider of credit and charge cards over allegations that the companies had violated the Equal Credit Opportunity Act (ECOA) by discriminating against consumers in Puerto Rico, the U.S. Virgin Islands, and other U.S. territories.  According to the consent order, the subsidiaries provided consumers in those regions with products and services that were inferior to those available in the 50 states.  The companies also allegedly discriminated against consumers with a Spanish-language preference by engaging in different collection practices for such consumers.

The consent order follows a supervisory review, through which the CFPB concluded that, from at least 2005 to 2015, the companies’ Puerto Rico cards had different pricing, underwriting, consumer and account management services, and collection practices than its U.S. cards.  More than 200,000 consumers were allegedly harmed by these discriminatory practices, which included charging higher fees and interest rates; offering less advantageous promotional offers; denying credit to certain Puerto Rico applicants who would have been approved for comparable cards had they lived in the 50 U.S. states; and requiring more money to settle debts.  On average, Puerto Rico cardholders settled for 73 percent of the total owed amount, while U.S. cardholders settled for only 55 percent of the total owed amount.

During the course of the CFPB’s review, the companies have voluntarily paid approximately $95 million in consumer relief, and the consent order requires them to pay at least an additional $1 million.  The consent order also requires the companies to develop and implement a comprehensive compliance plan to ensure the provision of credit and charge cards in a non-discriminatory manner to consumers in Puerto Rico, the U.S. Virgin Islands, and the U.S. territories.

The CFPB did not assess penalties against the companies for several reasons, including that the companies self-reported the violations, self-initiated remediation for the harm done to affected consumers, and fully cooperated in the CFPB’s review and investigation.

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