Bureau: ECOA prohibits sexual orientation/gender discrimination

(March 12, 2021) Sexual orientation discrimination and gender identity discrimination is prohibited under equal credit opportunity regulations, CFPB said this week in an interpretive rule. Further, the subhead for the press release issued by the agency announcing the rule read that the financial industry “is on notice that Bureau will not tolerate illegal discrimination against the LGBTQ+ community.”

CFPB Acting Director Dave Uejio said the interpretive rule is intended to clarify prohibitions under regulations implementing the Equal Credit Opportunity Act (ECOA). Uejio asserted that the action is to make clear that lenders cannot discriminate based on sexual orientation or gender identity. The bureau said discrimination includes that based on actual or perceived nonconformity with traditional sex- or gender-based stereotypes, and discrimination based on an applicant’s social or other associations.

“The CFPB will ensure that consumers are protected against such discrimination and provided equal opportunities in credit,” Uejio said in the release. The agency also indicated that it would take enforcement actions under the ECOA “to hold financial institutions accountable for their actions that violate ECOA.”

The bureau stated that in 2016 it held 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 (which implements the bureau’s Regulation B).

It also asserted that a Supreme Court decision last year (Bostock v. Clayton County, Georgia) 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. On top of that, the agency said, a request for information (RFI) it issued last summer to solicit public comments and information to identify opportunities to prevent credit discrimination and encourage responsible innovation under ECOA and Regulation B (including how Bostock should be interpreted) supports the agency’s action this week.

CFPB Clarifies That Discrimination by Lenders on the Basis of Sexual Orientation and Gender Identity Is Illegal