GE's credit card business faces two federal investigations
March 18 (Reuters) - Federal regulators are conducting two investigations into General Electric Co's credit card business for potential violations of consumer finance laws, according to a regulatory filing related to the unit's planned initial public offering.
The credit card business, now named Synchrony Financial, said it is in talks with the Consumer Financial Protection Bureau (CFPB) regarding a review of its debt cancellation products and related marketing practices, according to the regulatory filing dated March 13.
The consumer bureau, which was created by the 2010 Dodd-Frank law, has long had concerns about consumers' access to accurate credit information.
The company also said that it notified the CFPB about a problem with its Spanish-language filing after spotting it as part of an internal audit. ()
The matter was referred to the Department of Justice (DoJ), which initiated a civil investigation over a possible violation of the Equal Credit Opportunity Act, as some Spanish-speaking customers and customers residing in Puerto Rico were excluded from certain statement credit and settlement offers, according to the filing.
There is no assurance that the investigations will not have a "material adverse effect" on business and results, Synchrony said.
GE Capital, CFPB and the DoJ could not be reached for comment immediately outside regular U.S. business hours.
The IPO filing last Thursday was the first step in GE's long-awaited plan to exit retail finance and reduce its dependence on its financing arm.
The conglomerate has been reducing its reliance on GE Capital, its financing arm, which at one point accounted for almost half of the company's profit. The unit's rising funding costs during the 2008 financial crisis nearly sank the company.
Last December, GE Capital and CFPB resolved allegations that CareCredit, its medical credit-card division, failed to adequately explain loan terms in financing plan for medical and dental procedures. The company agreed to pay up to $34.1 million as part of the agreement.
According to the latest filing, resolution of the federal investigations could include "customer remediation" as well as civil money penalties and required changes to how the unit currently conducts its business.
In 2013, CFPB forced American Express and JPMorgan Chase & Co to refund customers as a result of investigations into the companies' credit card procedures.
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