WASHINGTON, D.C. — Right now the Shopper Monetary Safety Bureau (CFPB) introduced modifications to its supervisory operations to higher defend households and communities from unlawful discrimination, together with in conditions the place honest lending legal guidelines could not apply. In the midst of inspecting banks’ and different firms’ compliance with client safety guidelines, the CFPB will scrutinize discriminatory conduct that violates the federal prohibition towards unfair practices. The CFPB will carefully study monetary establishments’ decision-making in promoting, pricing, and different areas to make sure that firms are appropriately testing for and eliminating unlawful discrimination.
“When an individual is denied entry to a checking account due to their faith or race, that is unambiguously unfair,” stated CFPB Director Rohit Chopra. “We will likely be increasing our anti-discrimination efforts to fight discriminatory practices throughout the board in client finance.”
The CFPB enforces a number of legal guidelines that may goal discriminatory practices. Authorities regulators and personal plaintiffs have generally relied on the Equal Credit score Alternative Act (ECOA), a good lending regulation which covers extensions of credit score. Nevertheless, sure discriminatory practices may additionally set off legal responsibility beneath the Shopper Monetary Safety Act (CFPA), which prohibits unfair, misleading and abusive acts and practices (UDAAPs).
The CFPB printed an up to date examination guide as we speak for evaluating UDAAPs, which notes that discrimination could meet the standards for “unfairness” by inflicting substantial hurt to customers that they can not fairly keep away from, the place that hurt will not be outweighed by countervailing advantages to customers or competitors. Shoppers will be harmed by discrimination no matter whether or not it’s intentional. Discrimination will be unfair in instances the place the conduct may additionally be lined by ECOA, in addition to in situations the place ECOA doesn’t apply. For instance, denying entry to a checking account as a result of the person is of a specific race could possibly be an unfair apply even in these situations the place ECOA could not apply.
The CFPB will study for discrimination in all client finance markets, together with credit score, servicing, collections, client reporting, funds, remittances, and deposits. CFPB examiners would require supervised firms to indicate their processes for assessing dangers and discriminatory outcomes, together with documentation of buyer demographics and the affect of merchandise and charges on completely different demographic teams. The CFPB will have a look at how firms take a look at and monitor their decision-making processes for unfair discrimination, in addition to discrimination beneath ECOA.
Learn the up to date examination guide on Unfair, Misleading or Abusive Acts or Practices