Fair Lending

Subscribe to Fair Lending via RSS

As recently discussed on our podcast here, section 1071 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) amended the Equal Credit Opportunity Act (ECOA) to require lenders to collect information about small business credit applications they receive, including geographic and demographic data concerning the principal owners, lending decisions, and the price of credit. The Consumer Financial Protection Bureau (CFPB or Bureau) issued its proposed rule in 2021, and after considering the over 2,500 comments it received, on March 30, 2023, the CFPB issued the massive, highly technical, and complicated Final Rule. The Final Rule and its accompanying discussion and analysis, as well as the Official Commentary totals 888 pages exclusive of the 123-page Filing Instruction Guide and numerous other documents released by the Bureau. In this first in a multi-post blog series, we will provide a high-level overview of the Final Rule.

If a financial institution unilaterally reopens a closed deposit account to process a transaction, does that constitute an unfair act or practice under the Consumer Financial Protection Act (CFPA)? According to the Consumer Financial Protection Bureau (CFPB) in its Consumer Financial Protection Circular 2023-02 issued on May 10, the answer is yes: “This practice may…

As discussed here and here, in October 2022, the Federal Trade Commission (FTC) reached a $3.38 million settlement with Passport Automotive Group (Passport) and two of its officers over allegations that the automotive group violated the Equal Credit Opportunity Act (ECOA) and the FTC Act by adding “junk fees” onto the cost of its…

As discussed here, on March 30, the Consumer Financial Protection Bureau (CFPB) issued its final rule under Section 1071 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Final Rule). Section 1071 amended the Equal Credit Opportunity Act (ECOA) to impose significant data collection and reporting requirements on small business creditors. On May 12, the CFPB issued a Small Entity Compliance Guide that includes a detailed summary of the Final Rule’s requirements and examples to illustrate some key portions of the Final Rule. For example, illustrations include what constitutes covered originations, what date should be reported for an application, and how a covered entity is to report a response to whether the applicant is a women-owned, minority-owned, and/or LGBTQI+ business if the applicant refuses to respond.

On April 26, the Texas Bankers Association and Rio Bank, McAllen, Texas filed a complaint in the U.S. District Court for the Southern District of Texas challenging the Consumer Financial Protection Bureau’s (CFPB or Bureau) final rule under § 1071 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Final Rule). As discussed here, § 1071 amended the Equal Credit Opportunity Act (ECOA) to impose significant data collection and reporting requirements on small business creditors. The plaintiffs rely heavily on the Fifth Circuit’s decision in Community Financial Services Association (CFSA) v CFPB, finding the CFPB’s funding structure unconstitutional and, therefore, rules promulgated by the Bureau invalid. The plaintiffs also argue portions of the Final Rule violate various requirements of the Administrative Procedure Act (APA).

On April 25, officials from the Federal Trade Commission (FTC), the Civil Rights Division of the U.S. Department of Justice (DOJ), the Consumer Financial Protection Bureau (CFPB), and the U.S. Equal Employment Opportunity Commission (EEOC) (together, the Agencies) issued a joint statement warning against the potential for automated systems, including artificial intelligence (AI), used in…

At a U.S. Justice Department (DOJ) interagency event in Newark, New Jersey, Consumer Financial Protection Bureau (CFPB or Bureau) Director Rohit Chopra announced the next phase in the Bureau’s attempt to eliminate what he referred to as modern-day redlining: discriminatory targeting also known as reverse redlining. Since October 2021, the CFPB and DOJ have jointly…

On April 14, the Consumer Financial Protection Bureau (CFPB) submitted a statement of interest to the U.S. District Court for the Southern District of Florida arguing that the Equal Credit Opportunity Act’s (ECOA) prohibition on discrimination covers every aspect of an applicant’s dealings with a creditor, not just the specific terms of a loan (like…

As discussed here, in 2016 the Central District of California granted judgment in favor of the Consumer Financial Protection Bureau (CFPB) in its long-running challenge to CashCall, Inc.’s tribal-lending operation. Specifically, the court found that CashCall engaged in unfair, deceptive, and abusive acts or practices in violation of the Consumer Financial Protection Act (CFPA)…