NEWS: The CFPB issued an interpretive rule yesterday, clarifying that federal laws block discrimination in lending based on sexual orientation and gender identity. This includes “discrimination based on actual or perceived non-conformity with traditional sex- or gender-based stereotypes, and discrimination based on an applicant’s social or other associations,” the CFPB said.
Under the federal Equal Credit Opportunity Act (ECOA) and its implementing rules (Reg. B), credit unions and other lenders are prohibited from rejecting, discouraging or applying inconsistent standards to those seeking credit or loans because of their sex. For details, see The League’s ii Release No. B041. The new interpretive rule expands on the CFPB’s stance of what constitutes sex discrimination.
“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 CFPB’s interpretive ruling comes in the wake of a landmark 2020 U.S. Supreme Court decision in Bostock v. Clayton County, Georgia. The high court held that the prohibition against sex discrimination in Title VII of the Civil Rights Act of 1964 encompasses sexual orientation discrimination and gender identity discrimination. The CFPB said that the court’s decision also applies to the ECOA.
“Where appropriate, the CFPB will take enforcement action under ECOA to hold financial institutions accountable for their actions that violate ECOA,” the CFPB wrote. “The CFPB also looks forward to working 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.”
The CFPB’s rule follows a memorandum issued last month by the Department of Housing and Urban Development stating that the Fair Housing Act protects against discrimination based on sexual orientation or gender identity.