CFPB: Lender Discrimination Over Sexual Orientation/Identity Illegal


CFPB: Lender Discrimination Over Sexual Orientation/Identity Illegal

A Consumer Financial Protection Bureau interpretive rule says it won’t tolerate discrimination against the LGBTQ community, and lenders can’t discriminate based on applicants’ “actual or perceived nonconformity with traditional sex- or gender-based stereotypes.”

WASHINGTON, D.C. – The Consumer Financial Protection Bureau (CFPB) issued an interpretive rule affirming that the prohibition against sex discrimination under the Equal Credit Opportunity Act (ECOA) and Regulation B includes sexual orientation discrimination and gender identity discrimination. CFPB says that it also covers discrimination based on actual or perceived nonconformity with traditional sex- or gender-based stereotypes, and discrimination based on an applicant’s social or other associations.

“The CFPB will ensure that consumers are protected against such discrimination and provided equal opportunities in credit,” says CFPB Acting Director David Uejio.

In 2016, CFPB indicated that the law supports arguments that the prohibition against sex discrimination also affords broad protection from discrimination based on an applicant’s sexual orientation and gender identity under ECOA. 

On June 15, 2020, the U.S. Supreme Court issued a landmark decision in Bostock v. Clayton County, Georgia, holding that the prohibition against sex discrimination in Title VII of the Civil Rights Act of 1964 encompasses sexual orientation discrimination and gender identity discrimination.

On July 28, 2020, CFPB issued a Request for Information (RFI) to solicit public comments and information to identify opportunities to prevent credit discrimination and encourage responsible innovation under the Equal Credit Opportunity Act (ECOA) and Regulation B. Among the questions it posed, CFPB asked whether the Bostock decision should affect how the CFPB interprets ECOA.

The recent announcement is an interpretive rule because the Supreme Court decision didn’t directly address consumer lending. However, the protected classes included under sex discrimination in the case are similar to those identified under ECOA.

“The CFPB is issuing today’s interpretive rule consistent with the Supreme Court’s Bostock decision and supported by many of the public comments received in response to the ECOA RFI,” CFPB said in a media release announcing the decision. “The CFPB will review its publications and examination guidance documents and, if needed, update these and other materials to reflect this interpretive rule.”

The bureau also said it would “take enforcement action … to hold financial institutions accountable for their actions that violate ECOA.”

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