Economic justice remains a keystone effort of the Civil Rights Movement, and consumer protection is a critical component of that effort. The lasting impacts of overt and systemic racism are evident in the persistent generational wealth and homeownership gaps between Black families and their white counterparts.
Fair, equitable, and nondiscriminatory access to credit is a tool of opportunity. Credit facilitates access to life-enriching activities, including entrepreneurship, education, housing, transportation, health care, employment, and much more. Attacks on consumer protections limit those opportunities. For this reason, combatting discriminatory lending has been a key focus of the Consumer Financial Protection Bureau (CFPB) since day one.
2024 marks the 50th anniversary of the passage of the Equal Credit Opportunity Act (ECOA), the principal civil rights law under the CFPB’s jurisdiction and a powerful tool to achieve economic equity for communities of color. ECOA remains vibrant today through the CFPB’s efforts to protect consumers and small business owners from discouragement and discrimination based on race, color, religion, national origin, sex, age, receipt of public assistance income, and exercising their consumer protection rights when they are seeking, applying for, and using consumer and small business credit. These protections extend to various types of credit, such as business loans, credit cards, student loans, auto loans, installment loans, and mortgages. ECOA requires fairness in any aspect of a credit transaction, including decisions on applications, interest rates, and other fees, how a consumer or entrepreneur is treated when they become delinquent in making payments on a loan, and much more.
Vigorous enforcement of ECOA and other existing consumer protection laws is key to advancing economic justice. The centuries-old practice of redlining—systematically denying credit to consumers on account of their race or other protected class—is sadly not yet a relic of the past. The CFPB, along with our interagency partners, has brought and will continue to bring numerous actions against lenders, including non-bank lenders,[1] for redlining communities of color by intentionally avoiding lending in those communities, using its authorities to enforce ECOA and other consumer protection laws.
The CFPB is also filing court briefs to support efforts by private plaintiffs to enforce ECOA. One of our briefs supported a case filed to combat companies’ discriminatory targeting of Black consumers with predatory financial products and services by, for example, misrepresenting the true cost of a degree program while arranging for students to take out loans to enroll or engaging in other predatory conduct relating to the performance of educational goods and services obtained with credit. [2] In another brief, the CFPB and the Justice Department weighed in on a Black couple’s challenge to their home appraisal, explaining that mortgage lenders can be liable under ECOA for relying on discriminatory appraisals. [3]
Another effort is the CFPB’s supervisory work and interagency collaboration to address a discriminatory lending restriction that disproportionately impacts Black consumers and entrepreneurs: how applicants’ criminal records are treated when they apply for credit. The CFPB’s exams have identified practices that risk discrimination in several areas of credit, including mortgage origination, auto lending, and credit cards. Still, most notably within small business lending. [4] The CFPB also supported recent rulemaking efforts by the Small Business Administration to eliminate barriers in its lending programs for applicants who have a criminal history. [5] Additionally, in the Fall of 2023, as a member of the FDIC Board of Directors, CFPB Director Rohit Chopra voted in favor of a proposed rule that implements the Fair Hiring in Banking Act. This law expands job opportunities in financial institutions to certain justice-involved individuals.
Digital redlining is no less problematic. In this golden anniversary year of ECOA’s passage, it is important to note that this civil rights law not only remains relevant in addressing the problems that persist but is also relevant when responding to threats that are emerging in new computational methods marketed as “artificial intelligence.” Digital discrimination is pernicious, as it can be difficult to detect and has the potential to scale bias and discrimination at a much faster rate than traditional technologies. Despite the novelty of machine learning technologies and massive data surveillance, the CFPB continues to emphasize that the time-tested consumer protections of ECOA and other relevant consumer financial protection laws still apply.[6]
Nearly 60 years ago, in his speech, Where Do We Go From Here, Dr. Martin Luther King, Jr. stated, “[t]he deep rumbling of discontent in our cities is indicative of the fact that the plant of freedom has grown only a bud and not yet a flower.” While some progress has been made in the last 60 years, it is clear that the work to achieve economic equity is far from done.
Though decades old, ECOA and other consumer protection laws remain vital tools for fair lending enforcement and equity of credit opportunity. The CFPB continues to nurture the “plant of freedom” through steadfast efforts to ensure that the consumer financial protection laws live up to their potential in facilitating fair, equitable, and nondiscriminatory access to credit for Black and other underserved communities nationwide.
[1] https://www.consumerfinance.gov/about-us/newsroom/cfpb-doj-order-trident-mortgage-company-to-pay-more-than-22-million-for-deliberate-discrimination-against-minority-families/
[2] https://www.consumerfinance.gov/about-us/blog/protecting-people-from-discriminatory-targeting/
[3] https://www.consumerfinance.gov/about-us/blog/protecting-homeowners-from-discriminatory-home-appraisals/
[4] https://www.consumerfinance.gov/about-us/newsroom/unfair-deceptive-abusive-practices-across-wide-array-consumer-financial-product-lines/
[5] https://www.regulations.gov/document/SBA-2023-0013-0001
[6] https://www.consumerfinance.gov/compliance/circulars/circular-2023-03-adverse-action-notification-requirements-and-the-proper-use-of-the-cfpbs-sample-forms-provided-in-regulation-b/
[1] This article does not constitute legal interpretation, guidance, or advice of the Consumer Financial Protection Bureau. Any opinions or views stated by the authors are the authors’ own and may not represent the Bureau’s views.
