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FTC Updates CFPB On Action In The Fair Lending Space – Finance and Banking – United States – Mondaq News Alerts


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In early February, the Federal Trade Commission (FTC) sent its annual letter to the Consumer
Financial Protection Bureau (CFPB). The letter explained the
FTC’s activities related to the Equal Credit Opportunity Act
(ECOA) and Regulation B of ECOA. Pursuant to a January 2012
memorandum of understanding between the CFPB and the FTC, and
consistent with the Dodd-Frank Act, the FTC continues to coordinate
enforcement, rulemaking, and other activities in accordance with
ECOA.

Among other things, the Dodd-Frank Act made important changes to
ECOA and other consumer laws, such as giving the CFPB rulemaking
and enforcement authority for ECOA. Under the Dodd-Frank Act, the
FTC retained its authority to enforce ECOA and Regulation B. In
addition, the Dodd-Frank Act gave the FTC the authority to enforce
any CFPB rules applicable to entities within the FTC’s
jurisdiction, which include most providers of financial services
that are not banks, thrifts, or federal credit unions.

The FTC’s annual letter noted only one development within
the fair-lending enforcement space. Specifically, the CFPB, FTC,
Department of Justice, and Federal Reserve Board jointly filed an
amicus brief in the U.S. Court of Appeals for the Seventh Circuit
in Fralish v. Bank of America One, N.A. In
particular, the amicus 
brief
 requests that the Seventh Circuit reverse the
district court’s ruling that a lender’s customer who
has already received credit, and who was not currently applying for
credit, is not an “applicant” under ECOA’s
adverse action notice requirements.

In addition, the FTC’s letter had more to say regarding
fair lending research and policy development. In this space, the
FTC discusses (1) a report issued by the FTC in 2021, which noted
differences in the way that fraud and other consumer problems
affect communities of color; (2) the FTC Military Task
Force’s continuation of its work on military consumer
protection issues and the FTC staff’s role as a liaison to
the American Bar Association’s Standing Committee on Legal
Assistance for Military Personnel, which supports initiatives to
deliver legal assistance and services to servicemembers, veterans,
and their families; and (3) the FTC’s continuation of its (a)
service as a member of the Interagency Task Force on Fair Lending
along with the CFPB, DOJ, HUD and the federal banking agencies, and
(b) participation in the Interagency Fair Lending Methodologies
Working Group, which consists of staff members from the FTC, CFPB,
DOJ, HUD, federal banking agencies, and the Federal Housing Finance
Agency.

Lastly, the FTC discussed in the letter developments in consumer
and business education. The letter addresses the FTC’s
efforts to provide education on significant issues regarding
Regulation B. These efforts include blog posts published by the
FTC, one post for consumers and two posts for businesses.

Takeaways

Federal regulators continue to signal that fair lending
enforcement will be a top priority. In particular, regulators have
made it clear that they consider all phases of
the lending process – from advertising to loss mitigation and
all points in-between – to be subject to ECOA. Lenders should
spend time and effort shoring up their fair lending controls, and
should strongly consider performing fair lending and fair servicing
audits on a regular basis.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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