CFPB clarifies rule prohibiting discrimination based on sexual orientation & gender identity
The Consumer Financial Protection Bureau (CFPB) made a forceful declaration on Tuesday, stating the “industry is on notice” and that the bureau “will not tolerate illegal discrimination against the LGBTQ+ community.”
The regulator issued an interpretive rule clarifying that the prohibition against sex discrimination under the Equal Credit Opportunity Act (ECOA) and Regulation B includes sexual orientation discrimination and gender identity discrimination.
Officials explained this prohibition also covers 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.
“In issuing this interpretive rule, we’re making it clear that lenders cannot discriminate based on sexual orientation or gender identity,” CFPB acting director David Uejio said in a news release. “The CFPB will ensure that consumers are protected against such discrimination and provided equal opportunities in credit.”
In 2016, in response to an inquiry from Services & Advocacy for GLBT Elders, the CFPB indicated 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.
Then on June 15, the U.S. Supreme Court issued a landmark decision in Bostock v. Clayton County, Georgia, 140 S. Ct. 1731, 207 L. Ed. 2d 218 (2020), holding that the prohibition against sex discrimination in Title VII of the Civil Rights Act of 1964 encompasses sexual orientation discrimination and gender identity discrimination.
Subsequently, on July 28, the CFPB recapped that it issued a request for information (RFI) to solicit public comments and information to identify opportunities to prevent credit discrimination and encourage responsible innovation under ECOA and Regulation B.
Among the questions posed, the CFPB asked whether the Bostock decision should affect how the CFPB interprets ECOA.
The CFPB emphasized that issuing the interpretive rule is consistent with the Supreme Court’s Bostock decision and supported by many of the public comments received in response to the ECOA RFI.
The bureau noted that it will review its publications and examination guidance documents and, if needed, update these and other materials to reflect this interpretive rule.
And, where appropriate, the CFPB added that it will take enforcement action under ECOA to hold financial institutions accountable for their actions that violate ECOA.
“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,” officials went on to say.
To read the interpretive rule, go to this website.