CFPB and Credit Card Co. Remediate Discriminatory Card Terms

09/22/17 – The Consumer Financial Protection Bureau (“CFPB”) and a large credit card provider have resolved issues that have caused the provider to discriminate against consumers in Puerto Rico, the U.S. Virgin Islands, and other U.S. territories.

The CFPB determined that the credit card company violated the Equal Credit Opportunity Act (“ECOA”) by providing consumers in U.S. territories, including Puerto Rico, with credit and charge card terms that were inferior to those available in the 50 states. Additionally, the CFPB found that the company also treated consumers with Spanish-language preferences differently. The company first discovered that it was engaging in potentially discriminating acts and self-reported to the CFPB in 2013.

Through the course of a supervisory review, the Bureau concluded that, from at least 2005 to 2015, the company’s Puerto Rico cards had different—and often worse—pricing, rebates, and promotional offers, underwriting, customer and account management services, and collections practices than its U.S. cards. The Bureau’s review did not find that the company intentionally discriminated against its customers but rather found that the differences were the result of the company’s card management structure, which had different business units overseeing its Puerto Rico cards and U.S. cards.

Some of the differences between the account terms offered to consumers in Puerto Rico, as compared to consumers in the 50 states, included:

• Charging higher fees and interest rates and offering less advantageous promotional offers;
• Imposing more stringent credit score cutoffs and lower credit limits; and
• Requiring more money to settle debt.

To remediate consumers, the company has paid approximately $95 million to consumers during the course of the CFPB’s review. The consent order between the CFPB and the company also requires the company to pay at least another $1 million to compensate harmed consumers. The CFPB did not assess penalties based on a number of factors, including the fact that the company self-reported the violations, self-initiated remediation for the harm done to affected consumers, and fully cooperated with the CFPB’s review and investigation.

CFPB Press Release; Consent Order.