The regulator said that from 2015 to 2021, Citigroup managers trained employees to stereotype applicants suspected of being of Armenian descent, targeting those whose last names ended in "ian" and "yan," believing them likely to commit fraud.
Many victims were in Glendale, California, which is sometimes nicknamed "Little Armenia" and home to about 15% of the Armenian-American population in the United States.
Citigroup was accused of applying more stringent criteria when evaluating victims' card applications, including requiring additional information or denying applications altogether.
The CFPB also said bank employees lied to applicants by giving them fake reasons for denials, and were instructed not to discuss the discrimination in writing or over the phone.
According to a consent order, some employees referred to card applicants they suspected were of Armenian descent as "Armenian bad guys" or the "Southern California Armenian Mafia."
The payment includes a $24.5 million civil fine as well as $1.4 million of restitution to harmed applicants, for violations of the federal Equal Credit Opportunity Act.
Citigroup apologized, saying it had been trying to thwart an Armenian fraud ring in California but that a "small number" of employees had circumvented its fraud detection protocols. It said it has disciplined people who were directly involved.
"While we prioritize protecting our bank and our customers from fraud, it is unacceptable to base credit decisions on national origin," the New York-based bank said in a statement.
Citigroup had been using software to screen card applications for indicia of fraud, but some employees looked at applicants' last names first, a person familiar with the matter said.
