Racism in the Credit Card Industry
R acism in the Credit Card Industr y
Andrea Freeman
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RACISM IN THE CREDIT CARD INDUSTRY*
ANDREA FREEMAN**
In a social and financial climate characterized by deep racial and
socioeconomic divide, racism against credit card applicants and
consumers is a core piece of the systemic inequality that perpetuates
dramatic disparities in wealth, employment, health, and education.
Over several decades, credit cards have evolved into an essential
tool for lower- and middle-class families to maintain financial
stability through strategic balancing between debt and disposable
income. Now, without a credit card, many households cannot
manage to meet the basic needs of their families. Credit card
companies take advantage of this reality, imposing exploitative fees,
interest rates, and other conditions on consumers who have no
choice but to use the companies’ products. Even worse, the
companies do so in a racially discriminatory way, burdening Black
and Latino customers with the worst credit card terms, often
unrelated to credit risk. This type of consumer racism dates back to
the Reconstruction era and reflects an unbroken chain of laws and
policies cementing racial economic inequality. Social norms and
stereotypes make the resulting inequality appear cultural and
personal instead of systemic and structural.
This Article is the first to apply a critical race theory analysis to the problem of racism against credit card consumers. After describing the role that history and stereotyping play in allowing credit card
* © 2017 Andrea Freeman.
** Visiting Professor, U.C. Berkeley School of Law (Spring 2017); Assistant Professor of
Law, University of Hawaii at Manoa William S. Richardson School of Law; J.D., U.C.
Berkeley School of Law; B.A., University of Toronto.
This Article benefited immensely from careful readings by Angela P. Harris, Robin
Lenhardt, Jasmine B. Gonzales Rose, Meera Deo, Margaret Russell, and Lauren Willis;
lengthy conversations with Charles Lawrence III; comments received at the 2016
Yale/Harvard/Stanford Junior Faculty Forum from Ian Ayres, Jessica Clarke, Erika Wilson,
Katie Young, and other participants; the faculty at the University of Miami School of Law,
particularly Charlton Copeland, Osamudia James, Mary Ann Franks, Caroline Bradley,
Ileana Porras, David Abaraham, Donna Coker, Patrick Gudridge, Stephen Halpert, Felix
Mormann, Kunal Parker, Leigh Osofsky, and Andrew Dawson; at the 2015 AALS Consumer
Law panel from Jim Hawkins and Nathalie Martin; and at the 2016 Marquette University Law
School Junior Faculty Works-in-Progress Workshop from David Papke, Alexandra Roberts,
Ifeoma Ajunwa, Janie Kim, and Erik Girvan; and from tireless research assistance from
Mykie Ozoa, Darene Matsuoka, Rochelle Sugawa, and Fern Ann Grether, as well as Berkeley
librarian extraordinaire Dean Rowan.
NORTH CAROLINA LAW REVIEW
[Vol. 95
corporations to discriminate against consumers, it identifies fatal
flaws in the two laws designed to address racial discrimination and
inequality in credit, the Equal Credit Opportunity Act and the
Community Reinvestment Act. It then proposes amendments to the
Consumer Accountability Responsibility and Disclosure Act based on rehabilitative reparations theory and slavery disclosure laws that would require credit card companies to make significant investments into the communities they harm.
II. HOW CONSUMER LAW FAILS TO PROTECT CONSUMERS
FROM RACIAL DISCRIMINATION .............................................1118
A. The Equal Credit Opportunity Act ....................................1119
B. The Community Reinvestment Act ....................................1128
III. CALL TO REFORM CONSUMER LAW BASED ON
REHABILITATIVE REPARATIONS THEORY............................1140
A. Proposal to Reform Consumer Law..................................1141
B. Rehabilitative Reparations ..................................................1143
C. Slavery Disclosure Laws .....................................................1151
CONCLUSION .........................................................................................1158
INTRODUCTION
I’m Kan, the Louis Vuitton Don
Bought my mom a purse, now she Louis Vuitton Mom
I ain’t play the hand I was dealt, I changed my cards
I prayed to the skies and I changed my stars
I went to the malls and I balled too hard
‘Oh my god, is that a Black Card?’
I turned around and replied, why yes, but I prefer the term
African American Express
Kanye West, Last Call1
When Karyn Morton applied for a Capital One credit card online,
the company’s website offered her two cards based on information
gathered from a data mining company after Karyn clicked once on the
company’s website.2 To its credit, Capital One accurately identified
Karyn as a Black, Detroit homeowner who reads major metropolitan
newspapers and watches the NAACP Image Awards.3 But Capital One
also got a (...truncated)