The Consumer Financial Protection Bureau (CFPB) said it will use all “available legal avenues” to pursue discriminatory lenders. On April 18, the CFPB unveiled information intended to help consumers identify and avoid credit discrimination. The agency also released a compliance bulletin reaffirming its commitment to enforcing the Equal Credit Opportunity Act (ECOA) under Regulation B.
Specifically, the agency reaffirmed the ECOA’s disparate impact doctrine. The bureau noted that courts have employed several methods for proving lender discrimination under the ECOA including: overt evidence of discrimination; evidence of disparate treatment; and evidence of disparate impact.
Disparate impact occurs when a lender’s practices or policies are appearing neutral on their face, but have discriminatory effects.
According to Regulation B’s commentary, the act: “may prohibit a creditor practice that is discriminatory in effect because it has a disproportionately negative impact on a prohibited basis, even though the creditor has no intent to discriminate and the practice appears neutral on its face, unless the creditor practice meets a legitimate business need that cannot reasonably be achieved as well by means that are less disparate in their impact.”
“In response to recent inquiries, the CFPB states that it will continue to adhere to the fair lending principles outlined in Regulation B,” the agency bulletin stated. “Consistent with other federal, supervisory and law enforcement agencies, the CFPB reaffirms that the legal doctrine of disparate impact remains applicable as the Bureau exercises its supervision and enforcement authority to enforce compliance with the ECOA.
“As the CFPB exercises its supervisory and enforcement authority, it will consider evidence of the disparate impact doctrine as one method of proving lending discrimination under the ECOA and Regulation B,” the agency continued.
The bureau also released a list of tips and warning signs intended to help consumers identify and avoid credit discrimination.
The tips are broken down by category: the consumer’s rights under the Equal Credit Opportunity Act (ECOA), how consumers can protect themselves, and which warning signs consumers should look for.
“We want consumers to avoid the marketplace’s silent pickpocket –– discrimination,” said CFPB Director
Richard Cordray. “We cannot afford to tolerate practices, intentional or not, that unlawfully price out or cut off segments of the population from the credit markets. That’s why the CFPB is educating consumers about their fair lending rights and pursuing lenders whose practices are discriminatory.”