The Consumer Financial Protection Bureau has order GE Capital Retail Bank to pay $225 million in refunds to customers. The decision is part of a recent crackdown on the credit industry for deceptive and illegal practices.
GE Capital, now Synchrony Bank, was ordered to $56 million to customers that the Consumer Financial Protection Bureau says the company mislead when it came to add-on features. Services like credit protection and debt cancelation were described as free to consumers when they were not.
The remainder of the money will go to 108,000 customers who were allegedly discriminated against. The remaining $169 million will go to consumers who were denied debt cancellation services because they resided in Puerto Rico or requested Spanish communications instead of English. The Justice Department has called this the largest credit discrimination settlement to-date.
Jocelyn Samuels, acting assistant attorney general for the civil rights division of the Department of Justice, said that the company violated the Equal Credit Opportunity Act.
“The blatant discrimination that occurred here is unlawful and will not be tolerated,” said Samuels said. “Borrowers have the right to credit card terms that do not differ based on their national origin, and the settlement today sends the message that the Justice Department can and will vigorously enforce the law against lenders who violate that right.”
The alleged discrimination took place between 2009 and 2012 and was reported to the consumer bureau by Synchrony Bank. The bank did not admit nor deny the allegations. So far the bank has issued $131.8 million of the settlement money to its customers.
Dori Abel, a spokeswoman for GE Capital’s retail banking unit said company employees worked cooperatively with federal officials after the problem was discovered.
“Our priority is treating our customers fairly,” she said.
The bank will also be required to pay a $3.5 million civil penalty Richard Cordray, the consumer bureau’s director, said.
GE Capital was required to pay a $34 million settlement just last year for deceptively enrolling customers in a credit card for medical debt. The bureau has collected $85 billion in fines and $1.5 billion in refunds since its inception in 2009.