1. The United States brings this action to enforce
provisions of the Equal Credit Opportunity Act, 15 U.S.C.
§§ 1691-1691f ("ECOA").
2. This Court has jurisdiction of this action pursuant to
28 U.S.C. § 1345 and 15 U.S.C. § 1691(h), and venue is
appropriate pursuant to 28 U.S.C. § 1391(c).
3. Defendant, Associates National Bank (hereinafter
"ANB"), is a National Bank incorporated under the laws of the
State of Delaware, with its principal place of business in
Wilmington, Delaware. As a National Bank, ANB is subject to the
regulatory supervision of the Office of the Comptroller of the
4. ANB is a wholly-owned subsidiary of Associates First
Capital, which became a 100% publicly-owned entity on April 7,
5. ANB is a consumer credit card bank engaged in extending
consumer credit to persons through its credit card portfolios.
ANB approves and originates all credit card accounts at its
Wilmington, Delaware, headquarters. ANB is a creditor as that
term is defined by section 702(e) of the ECOA, 15 U.S.C.
6. Beginning in April 1997, the OCC conducted an
examination of the lending practices of ANB to evaluate its
compliance with the Equal Credit Opportunity Act. Based on
information gathered in its examination, the OCC determined that
it had reason to believe that ANB had engaged in a pattern or
practice of discrimination on the basis of national origin by
treating applicants using Spanish-language applications for its
UNOCAL 76 MasterCard (hereinafter "UNOCAL") differently than
applicants using English-language UNOCAL applications and by
excluding customers in Spanish-language credit card portfolios
from promotional programs.
7. Pursuant to 15 U.S.C. § 1691e(g), the OCC referred the
matter to the Attorney General on June 19, 1998, for appropriate
enforcement action, following the OCC's determination described
in Paragraph 6.
8. Beginning in 1993, ANB entered into an arrangement with
UNOCAL, a California-based company that operates gasoline
stations, to offer UNOCAL customers an ANB/UNOCAL co-brand
MasterCard. The card is marketed through direct mailings to
customers in California in the areas where UNOCAL stations are
located and through applications that are available at UNOCAL gas
stations located in California. All credit card applications are
received by ANB and ANB makes decisions whether to approve or
deny an application.
9. In or around November 1994, ANB began to use Spanish-language, as well as English-language applications, in UNOCAL gas
stations. ANB coded these applications "Hispanic," and data
regarding these applications were retained in computerized form
in a subfile, the only subfile, in the UNOCAL portfolio.
10. ANB processes all UNOCAL applications through a
combination of automated and judgmental underwriting steps.
These steps include a computerized credit scoring system. The
ostensible purpose of a credit scoring system is to provide a
lender with an objective estimate of the probability that the
loan will be repaid as agreed by the applicant. Credit scoring
systems are generally designed with the expectation that loan
applicants who attain a score that is equal to or greater than
the level indicating a probability of repayment that is
acceptable to the lender will be approved, while those who do not
will be denied the loan.
11. ANB assigns each UNOCAL credit card applicant to one of
five risk levels, based on the scope and duration of the
applicant's credit history. Applicants with the most favorable
credit history are placed in the lowest risk level. To obtain a
credit card, an applicant must obtain a minimum credit score
which differs by risk level (higher scores being required for
those assigned to higher risk levels). Applicants who meet the
minimum credit score are given a credit card with a maximum
credit line amount that varies based on risk level and the
individual applicant's income.
12. Beginning in January 1996, ANB implemented different
underwriting standards for its English-language applicants than
for its Spanish-language applicants. Credit score cutoffs were
lowered and credit line amounts were increased for English-language applicants processed through the English-language UNOCAL
portfolio ("SUNOM" -- Standard UNOCAL file). The credit score
cutoffs and credit line caps were not similarly changed for the
Spanish-language applicants processed through the Spanish-language UNOCAL portfolio ("HUNOM" -- Hispanic UNOCAL subfile).
The change resulted in more stringent underwriting standards and
lower credit limits for applicants using the Spanish-language
13. ANB continued applying disparate underwriting standards
to English-language and Spanish-language UNOCAL applicants until
at least April 1997.
14. As a result of ANB's discriminatory policies
implemented in January 1996, some Spanish-language applicants
were denied credit cards while similarly situated English-language applicants received credit cards. Further, some
Spanish-language applicants were granted lower credit line
assignments than similarly situated English-language applicants
15. ANB maintained other "Hispanic"-designated files for
some of its other credit card accounts. ANB discriminated
against "Hispanic"-designated cardholders in these accounts by
excluding them from certain promotional programs commonly offered
to English-language cardholders.
16. In carrying out the practices described in paragraphs 8
through 15 above, ANB has subjected Spanish-language applicants
and cardholders to discriminatory treatment on the basis of
national origin by intentionally subjecting them to stricter
underwriting standards and less favorable terms and conditions
than those applied to non-Hispanic applicants and cardholders.
17. ANB's policies and practices, as set forth above,
constitute discrimination against applicants with respect to
credit transactions, on the basis of national origin, in
violation of the Equal Credit Opportunity Act, 15 U.S.C.
18. ANB's policies and practices, as set forth above,
constitute a pattern or practice of resistance to the full
enjoyment of rights secured by the Equal Credit Opportunity Act,
as amended, 15 U.S.C. §§ 1691-1691f.
19. Persons who have been victims of ANB's discriminatory
policies and practices are aggrieved persons under the Equal
Credit Opportunity Act. As a consequence of ANB's policies and
practices, these persons have been denied their rights to equal
opportunity in credit and have suffered injury and damages.
20. The discriminatory policies and practices of ANB as
described herein were intentional and willful, and have been
implemented with reckless disregard for the rights of Hispanic