GE Capital to Refund $225 Million to Settle Credit-Card Allegations

GE Capital has agreed to pay $225 million to about 750,000 customers to settle federal allegations of deceptive and discriminatory credit-card practices, particularly excluding Latino customers from participating in two company debt-repayment programs, federal officials said Thursday.

The company’s retail-banking unit, now called Synchrony Bank, will provide about $169 million in refunds or credits to about 108,000 customers who were not told about the repayment programs because they indicated they preferred to receive communications in Spanish or had a mailing address in Puerto Rico, the Consumer Financial Protection Bureau and Justice Department said.

“The blatant discrimination that occurred here is unlawful and will not be tolerated,” said Jocelyn Samuels, the acting assistant attorney general for the civil rights division.

The settlement was the largest in a credit-card-discrimination case in the department’s history, she said. The practices, which took place from January 2009 to March 2012, violated the Equal Credit Opportunity Act.

Samuels said the bank discovered the discriminatory practices and alerted the consumer bureau, which regulates credit-card issuers. So far, the bank has provided $131.8 million of the $169 million in promised relief to its customers.

GE Capital did not immediately respond to a request for comment.

In addition, GE Capital agreed to refund $56 million to 638,000 credit-card customers who were subjected to deceptive marketing for debt-related products.

Federal officials said the company’s telemarketers misrepresented the costs and terms of those add-on products, with names such as Account Security and Debt Security.

For example, customers were misled into believing the programs were free or they were incorrectly told they would not be charged for the service if they paid their credit-card balance each month.

“This kind of conduct has no place in the consumer financial marketplace,” said consumer bureau Director Richard Cordray. “People deserve to be given clear information, and they deserve to be treated fairly.”

In addition to the refunds, the bank will pay a $3.5 million civil penalty, Cordray said.

The bureau, created by the 2009 financial-reform law, has been cracking down on banks for deceptive marketing of credit-card add-on products. Since 2012, the bureau has obtained about $1.5 billion in refunds and $85 billion in fines for such cases.

This article appeared in print in the June 23rd, 2014 edition of Hamodia.