Synchrony Financial, the new name of General Electric's consumer credit arm, is facing two federal probes over possible violations of consumer financial laws. It disclosed the investigations in filings with securities regulators last week.
The business is in discussions with the Consumer Financial Protection Bureau (CFPB) over "debt cancellation products" and how it has promoted those services. It also is in talks with the Justice Department over a separate issue -- previously investigated by the CFPB -- in which Synchrony allegedly excluded Spanish-speaking customers from settlement offers, in violation of federal lending discrimination laws.
Aracely Panameño, director of Latino affairs at the Center for Responsible Lending in Washington, says Spanish-speaking consumers tend to be the last to learn about interventions such as recalls and may be overly trusting of financial offers. "That's what makes them ripe for predatory actors and ripe for abuse," she said.
The Synchrony filing says the company caught the Spanish-language filing problem in an internal audit and notified the CFPB of the oversight. The company failed to print Spanish-language versions of settlement notices for delinquent customers.
The CFPB agreed in 2012 to collaborate with the Justice Department on enforcement of federal anti-discrimination laws. It also has aggressively gone after card products known as "add-ons." While companies say the products offer extra consumer protections, regulators complain that the marketing has been deceptive and the products offer fewer benefits than advertised. The bureau has reached settlements with four major credit card issuers over allegations that they misled consumers about the value of extra services, including lost-income protection and identity-theft monitoring.