By City News Service
A proposed class-action lawsuit filed in federal court by a San Fernando Valley resident accuses Citibank of routinely and illegally refusing Armenian Americans credit applications and/or closing their accounts due to what the bank allegedly believes is an ethnic propensity to engage in criminal fraud, according to papers obtained on Tuesday.
Mary Smbatian, a residential loan broker from Encino who also runs an apartment management business, contends that discrimination against those of Armenian descent was the reason her long-held Citibank accounts and cards were closed last year, according to the complaint filed Nov. 17 in Los Angeles.
The suit follows a Nov. 7 action in which Citibank signed a consent order with the Consumer Financial Protection Bureau, agreeing to pay $25.9 million to cover alleged violations of fair lending laws from at least 2015 to 2021. The agency alleged that a unit of Citibank had discriminated against store-branded credit-card applicants whose surnames ended with “ian” or “yan,” and often lived in and around Glendale.
According to the consent order, Citibank did not admit or deny any of the CFPB’s findings.
Although a Citibank spokesperson declined to comment on the lawsuit, the bank provided a statement issued at the time of the settlement with CFPB.
“Regrettably, in trying to thwart a well-documented Armenian fraud ring operating in certain parts of California, a few employees took impermissible actions,” the bank said in the statement. “While we prioritize protecting our bank and our customers from fraud, it is unacceptable to base credit decisions on national origin. We sincerely apologize to any applicant who was evaluated unfairly by the small number of employees who circumvented our fraud detection protocols.
“Following an internal investigation, we have taken appropriate actions with those directly involved in this matter, and we promptly put in place measures to prevent any recurrence of such conduct.”
Los Angeles County is home to the largest number of Armenians outside of Armenia, with more than 200,000 living in the region.
Citibank allegedly instituted the “redlining” policy in 2015 with an unfounded assumption that automatically considered people of Armenian heritage as likely to commit fraud, said attorney Ara Jabagchouria, the lead lawyer in a similar proposed class-action suit filed in Los Angeles this month against Citibank.
The attorney alleged that the bank’s “secret statewide policy” resulted in the rejection of credit card applications, rejection of requests for increased credit lines, and outright cancellation of accounts in good standing solely on the basis of perceived national origin, in violation of equal credit laws.
Both lawsuits seek to cover all individuals who allegedly suffered discrimination because of the policy. The suit seeks unspecified monetary damages from Citibank.
First published in the December 2 print issue of the Glendale News-Press.