The Consumer Financial Protection Bureau (CFPB) is modifying supervisory operations to bolster consumer finance discrimination protections, which includes circumstances where fair lending laws may not apply.
“When a person is denied access to a bank account because of their religion or race, this is unambiguously unfair,” CFPB Director Rohit Chopra said. “We will be expanding our anti-discrimination efforts to combat discriminatory practices across the board in consumer finance.”
The CFPB would scrutinize discriminatory conduct violating the federal prohibition against unfair practices while also examining financial institutions’ decision-making in advertising, pricing, and other sectors to ensure companies are appropriately testing for and eliminating discrimination.
While the CFPB acknowledged government regulators and private plaintiffs routinely rely on the fair lending law covering credit extension, the Equal Credit Opportunity Act (ECOA), the agency maintains certain discriminatory practices may also trigger liability under the Consumer Financial Protection Act (CFPA). The CFPB prohibits unfair, deceptive, and abusive acts and practices (UDAAPs).
The CFPB recently issued a revised exam manual used to evaluate UDAAPs, outlining discrimination may meet the unfairness criteria by causing substantial harm to consumers they cannot reasonably avoid, where countervailing benefits to consumers or competition do not outweigh the harm.
Consumers can be harmed by discrimination regardless of whether it is intentional. Discrimination can be unfair in cases where ECOA may also cover the conduct and in situations where ECOA does not apply.