On March 9, 2021, the Consumer Financial Protection Bureau (“CFPB” or “Bureau”) issued an interpretive rule clarifying that the Equal Opportunity Credit Act (“ECOA”) and its implementing regulation, Regulation B, prohibit discrimination based on sexual orientation and gender identity. The CFPB made clear that this prohibition also extends to “actual or perceived nonconformity with traditional sex- or gender-based stereotypes, and discrimination based on an applicant’s social or other association.” Specifically, the Bureau found that, under ECOA and Regulation B:
- (1) “sexual orientation discrimination and gender identity discrimination necessarily involve consideration of sex”;
- (2) “an applicant’s sex must be a ‘but for’ cause of the injury, but need not be the only cause”; and
- (3) “discrimination against individuals, and not merely against groups, is covered.”
In supporting the interpretive rule, the CFPB referenced its 2016 response to an inquiry from Services & Advocacy for GLBT Elders, where it suggested that the statutory language of ECOA—specifically, ECOA’s prohibition against sex discrimination—extends to prohibiting discrimination based on sexual orientation and gender identity. The Bureau also referenced the Supreme Court’s decision in Bostock v. Clayton County, Georgia, 40 S. Ct. 1731, 207 L. Ed. 2d 218 (2020), which held that Title VII of the Civil Rights Act prohibited discrimination based on sexual orientation and gender identity. The rule follows the Bureau’s Request for Information (“RFI”), issued on July 28, 2020, regarding credit discrimination and responsible innovation under ECOA and Regulation B, which asked how the Bostock decision should affect the Bureau’s interpretation of ECOA. The Bureau also signaled its support for the Equality Act, which would codify protections for consumers against sexual orientation and gender identity discrimination with respect to financial products and services.
In the press release for the interpretive rule, Acting Director Uejio stated: “The CFPB will ensure that consumers are protected against such discrimination and provided equal opportunities in credit.” The release also indicated that, “where appropriate, the CFPB will take enforcement action under ECOA to hold financial institutions accountable for their actions that violate ECOA.” As such, financial institutions should consider reviewing their current lending practices with an eye toward the treatment—both intentional and unintentional—of customers based on sexual orientation and gender identity, and carefully review the examples provided in the interpretive rule.