Two federal investigations into General Electric Co.'s credit card business are underway to determine if the unit violated consumer finance laws.
Synchrony Financial, the planned new name of GE's consumer credit business, said in a filing with securities regulators that it is in talks with the Consumer Financial Protection Bureau related to "debt cancellation products" and marketing practices for those products. The disclosure was part of paperwork for a planned initial public offering of the business.
The company previously had notified the CFPB about a problem with its Spanish-language filing after discovering it during an internal audit. That matter was then referred to the Department of Justice, which began a civil investigation over a possible Equal Credit Opportunity Act violation.
At issue was a concern that some Spanish-speaking customers were left out from certain statement credit and settlement offers, according to the filing.
Resolution of the federal investigations could include "customer remediation" and civil money penalties as well as required changes to how the unit currently conducts its business, according to the filing.
The IPO filing last Thursday was GE's first step in its long-awaited plan to leave retail finance and cut its dependence on its financing arm. That arm at one point accounted for almost half of the company's profit but the unit's increasing funding costs during the 2008 financial crisis took a large financial toll on the compnay.
GE expects to complete the IPO later this year. GE currently is targeting to complete its exit from its Retail Finance business through a split-off transaction in 2015. GE also reports it could choose to exit by selling or otherwise distributing or disposing of all or a portion of its remaining interest in the business.
Last December, GE Capital and the CFPB resolved allegations that CareCredit, its medical credit card division, did not adequately explain loan terms in financing plans for medical and dental procedures. The company agreed to pay up to $34.1 million as part of the agreement. Concerns about CareCredit's practices were first targeted last June by New York state regulators.