CFPB: Discrimination Illegal by Lenders on Basis of Sexual Orientation, Gender Identity
The Consumer Financial Protection Bureau on Mar. 9 issued an interpretive rule clarifying that prohibition against sex discrimination under the Equal Credit Opportunity Act and Regulation B includes sexual orientation discrimination and gender identity discrimination.
This prohibition 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.
A sub-headline in the CFPB announcement said the “industry is on notice that Bureau will not tolerate illegal discrimination against the LGBTQ+ community.”
“In issuing this interpretive rule, we’re making it clear that lenders cannot discriminate based on sexual orientation or gender identity,” said CFPB Acting Director David Uejio. “The CFPB will ensure that consumers are protected against such discrimination and provided equal opportunities in credit.”
The interpretive rule is intended to clear up ambiguities in ECOA and Regulation B that occurred during the Trump Administration. In 2016, in response to an inquiry from Services & Advocacy for GLBT Elders, the 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 decision in Bostock v. Clayton County, Georgia, 140 S. Ct. 1731, 207 L. Ed. 2d 218 (2020), 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, the CFPB issued a Request for Information to solicit public comments and information to identify opportunities to prevent credit discrimination and encourage responsible innovation under ECOA and Regulation B. Among the questions posed, the CFPB asked whether the Bostock decision should affect how the CFPB interprets ECOA.
The CFPB said it is issuing today’s interpretive rule consistent with the Bostock decision and supported by many of the public comments received in response to the ECOA RFI. The CFPB will review its publications and examination guidance documents and, if needed, update these and other materials to reflect this interpretive rule. And, where appropriate, the CFPB will take enforcement action under ECOA to hold financial institutions accountable for their actions that violate ECOA.
The CFPB also said it would work with Congress on the Equality Act, which, if enacted, would codify protections for consumers against sexual orientation and gender identity discrimination in all financial products and services.
To read the interpretive rule click here.
