United States: CFPB And Card Issuers Resolve ECOA Action Involving Cards Offered In U.S. Territories And Cardholders With Spanish Language Preference


On August 23, 2017, the Consumer Financial Protection Bureau (CFPB) announced the resolution of an administrative action under the Equal Credit Opportunity Act and its implementing regulation, Regulation B (collectively, "ECOA"), against American Express Centurion Bank and American Express Bank, FSB (collectively, the "Issuers"). In the proceeding, the CFPB alleged the Issuers violated ECOA by (i) offering credit and charge card products and services to consumers and small businesses in Puerto Rico and other U.S. territories on less favorable terms than it offered similar products and services to consumers and small businesses in U.S. states, and (ii) conducting collection activities with consumer cardholders with Spanish language preferences without making available to such cardholders collection offers and programs comparable to the offers and programs that it made available to cardholders without Spanish language preferences.

The Issuers agreed to the entry of a consent order ("Consent Order") but did not admit to any findings of fact or conclusions of law. Importantly, the CFPB noted favorably the Issuers' cooperation with the CFPB's investigation, self-reporting, and voluntary provision of approximately $95 million in remediation to affected consumers. To resolve the action, the Issuers agreed to provide at least $1 million in monetary redress to affected consumers beyond the borrower relief that was already voluntarily provided and to develop a plan to enhance the Issuers' compliance management systems to better control the risk of similar fair lending violations in the future. In light of the Issuers' cooperation, self-reporting, and voluntary remediation, however, the CFPB did not levy a civil money penalty or lodge allegations of unfair, deceptive, or abusive acts and practices.


According to the Consent Order, in 2013, the Issuers self-reported to the CFPB certain differences in the terms of credit and charge cards offered in Puerto Rico and the U.S. Virgin Islands (the "PRVI Cards") and the terms of comparable credit and charge cards offered in U.S. states (the "Mainland Cards"). In coordination with Issuers, the CFPB identified statistical discrepancies between PRVI Cards and Mainland Cards with respect to (i) pricing, rebates, and promotions; (ii) underwriting and credit line assignment; (iii) customer service and account management; and (iv) debt collection and mitigation.

  • Pricing, Rebates, and Promotions. According to the allegations in the Consent Order, the pricing for PRVI Cards was higher than for the Mainland Cards. For instance, one PRVI Card had a $45 annual fee and higher average annual percentage rates (APRs) than comparable Mainland Cards, which had lower APRs and no annual fee. Additionally, the CFPB alleged that promotions on PRVI Cards, such as introductory zero percent (0%) APR offers and first-year annual fee waivers, were not as widely available as they were on Mainland Cards. For example, the CFPB alleged that 29% of PRVI Cards had a zero percent APR introductory offer, while 90% of corresponding Mainland Cards had a zero percent APR introductory offer. Similarly, promotions sued to residents of Guam, American Samoa, and the Northern Mariana Islands (the "Pacific Territories") were not as valuable as promotions on Mainland Cards issued to residents of the 50 U.S. states or the District of Columbia. 
  • Underwriting and Credit Line Assignment. According to the allegations in the Consent Order, the Issuers declined certain applications for PRVI Cards that would have been approved for comparable Mainland Cards and assigned lower initial credit lines to new PRVI Card cardholders than it assigned to similarly situated cardholders of new Mainland Cards. Additionally, the CFPB alleged that the Issuers offered one or more Mainland Cards for small business customers, but did not offer a PRVI Card for such customers.
  • Customer Service and Account Management. According to the allegations in the Consent Order, the Issuers imposed certain adverse credit actions on certain PRVI Card cardholders, including credit line reductions and spending limits on charge card accounts, that it did not impose on comparable Mainland Card cardholders. The CFPB further alleged that the Issuers processed credit action appeals and card reinstatement requests differently for PRVI Card cardholders than it did for Mainland Card cardholders.
  • Collections and Debt Mitigation. The CFPB alleged that the Issuers settled with delinquent PRVI Card cardholders for an average of 73% of the total amount owed and settled with comparable delinquent Mainland Card cardholders for an average of 55% of the total amount owed. The CFPB also alleged that the Issuers excluded Mainland Card cardholders resident in the Pacific Territories and all PRVI Card cardholders from certain debt relief and debt management programs offered to Mainland Card cardholders resident in the 50 U.S. states and the District of Columbia. Furthermore, the CFPB separately alleged that the Issuers excluded both PRVI Card cardholders and Mainland Card cardholders who indicated a Spanish language preference from offers for established debt management programs.

Substantively, the CFPB appeared to build its ECOA allegations upon both disparate treatment and disparate impact theories, but this was not stated expressly in the Consent Order. In this regard, the Consent Order cited U.S. census data showing that Puerto Rico's population is 99% of either Hispanic or Latino origin, while the U.S. Virgin Islands' population is 76% black or African-American, and the Pacific Territories have a majority population of Asian Pacific Islanders. In each case, these percentages are in excess of those in the U.S. states for these protected groups. Though precise theories of liability were not articulated in the Consent Order, it appears the basis for the alleged pattern or practice of discrimination was national origin in the case of consumers in Puerto Rico and race and ethnicity in the case of consumers in the U.S. Virgin Islands and the Pacific Territories. In the Consent Order, the CFPB concluded that the alleged disparities were not intentional, but they also were not justified by a legitimate business need under ECOA.

As noted above, the Issuers responded to the CFPB's concerns by voluntarily providing approximately $95 million in remediation to affected consumers. Of that total, approximately $55.7 million in consumer relief was for disparities in pricing, rebates, and promotional offers; approximately $3.2 million was for disparities in underwriting; and approximately $35.7 million was for disparities in customer service, account management, collections, debt mitigation, and business unit assignment.


  • The Consent Order is a reminder that the application of U.S. consumer financial laws and regulations and the jurisdiction of U.S. financial regulators are not limited to the 50 U.S. states and the District of Columbia. Indeed, the Consent Order is the most recent in a series of settlements to involving comparison of credit products and services offered in U.S. territories with products and services offered in U.S. states.1 Financial institutions operating across the U.S. and in the U.S. territories should be mindful of the inherent risks of credit discrimination based on the race, national origin, and ethnicity of populations in U.S. territories and strive to seek parity among product and services offerings across credit origination and servicing platforms.
  • The Consent Order highlights the CFPB's emphasis on policies and procedures for consumer financial products and services offered to consumers who express a language preference other than English.2 If a financial institution supports a product or service in a language other than English, there may be an expectation at the CFPB that the financial institution should support the entire product or service lifecycle in that language. From the Consent Order, this appears to be particularly the case with respect to servicing and collection activities.3
  • To date, there have been mixed views of the value of self-reporting and concomitant self-correction and remediation as relates to the initiation and outcome of CFPB investigations and enforcement actions. The CFPB has issued guidance on how "responsible business conduct," such as self-reporting, may impact the exercise of its "enforcement discretion,"4 and the CFPB has recognized the value of self-reporting and related activities in other enforcement cases.5 However, self-reporting potential violations of the magnitude in this proceeding would seem to make a CFPB public enforcement action inevitable. This means that a financial institution's decision to self-report and voluntarily provide consumer remediation would depend, at least in part, on the extent of anticipated remedies and penalties in an ensuing enforcement action. On balance, it appears that imposition of the full range of remedies and penalties available to the CFPB can be mitigated through voluntary remediation, particularly if commenced either before or upon self-reporting. Though the CFPB imposed on the respondents extensive corrective measures relating to policies, procedures, and controls, the agency did not impose other common remedies in cases of this magnitude, such as civil money penalties. Moreover, the CFPB did not allege that the Issuers violated the CFPB's unfair, deceptive, or abusive acts or practices statute.6 Such allegations appear in a significant percentage of CFPB enforcement proceedings.

Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morrison & Foerster LLP. All rights reserved

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.