The Consumer Financial Protection Bureau (CFPB) continues to assert itself in the consumer credit card market, exercising both its supervisory and enforcement authority in finding that GE Capital Retail Bank (GE Capital), now operating as Synchrony Bank, engaged in discriminatory and deceptive practices against consumers. The two-part settlement reached with the CFPB and the U.S. Department of Justice (DOJ) resolved claims that GE Capital discriminated against Hispanic customers in violation of the Equal Credit Opportunity Act (ECOA), 15 U.S.C. §§ 1691-1691f, by not offering promotions to those whose preferred language was Spanish or had mailing addresses in Puerto Rico, even though they otherwise met the offer criteria. The CFPB cited its authority to supervise very large banks under the Consumer Financial Protection Act of 2010 (CFPA), 12 U.S.C. § 5515, as a basis for its jurisdiction to enforce the ECOA. GE Capital will pay $169 million to approximately 108,000 borrowers who were declined account balance settlement offers. The CFPB and the DoJ stated that the settlement with GE Capital was the biggest settlement in U.S. history over credit card discrimination.

Through the consent order, the CFPB also required GE Capital to pay $56 million, including a $3.5 million fine, to resolve allegations that the company deceptively sold five credit and debt cancellation add-on products in violation the CFPB’s unfair or deceptive acts or practices (UDAP) law contained in the CFPA, 12 U.S.C. §§ 5531(a) and 5536(a)(1)(B). The products were intended to cancel credit card balances or payments upon the occurrence of certain life events like involuntary unemployment or disability. GE Capital was alleged to have misrepresented to customers that the add-on products were free, glossed over certain eligibility requirements, or even made offers to customers who were known to be ineligible. Telemarketers working for the company were alleged to have misled customers by making product purchases seem like routine account updates and to have used false language to create a sense of urgency for the customer. 638,000 credit card customers will be compensated under the deceptive practices portion of the settlement, and GE Capital is required to end all deceptive marketing and discriminatory credit practices. If the company wants to engage in future telephone customer enrollments for credit card product add-ons, then the company must submit a compliance plan to the CFPB for approval.

CFPB Director Richard Cordray remarked that this was the latest of six significant Bureau enforcement actions regarding credit card add-on products that have netted roughly $1.5 billion for consumers. Financial institutions must be closely attentive to the CFPB exercising its supervisory and enforcement authority due to the possible risk of wide-ranging investigations or enforcement actions.