Bureau Eyes Discriminatory Lending Via All ‘Legal Avenues’

The U.S. Consumer Financial Protection Bureau said today it will use “all available legal avenues” to go after lenders whose practices discriminate against consumers.
The agency also said it is providing consumers with information to help them spot the warning signs of discrimination.
The information applies to auto loans, credit cards, student loans, mortgages, or other credit products.
“We want consumers to avoid the marketplace’s silent pickpocket – discrimination,” said CFPB Director Richard Cordray. “We cannot afford to tolerate practices, intentional or not, that unlawfully price out or cut off segments of the population from the credit markets. That’s why the CFPB is educating consumers about their fair lending rights and pursuing lenders whose practices are discriminatory.”
The CFPB has compiled tips and warning signs which are broken down by category: the consumer’s rights under the Equal Credit Opportunity Act (ECOA); how consumers can protect themselves; and which warning signs consumers should look for.
In a Compliance Bulletin released today, the bureau is also reaffirming its commitment to enforcing the ECOA, by recognizing the “disparate impact” doctrine.
Disparate impact occurs when a lender’s practices or policies are facially neutral but have discriminatory effects.
The CFPB said it will monitor banks and nonbanks under the its supervision for potential fair lending violations, including practices with unlawful discriminatory effects.
In 1994, the Department of Justice and other federal agencies issued the Interagency Policy Statement on Discrimination in Lending.
The agencies agreed that when lenders’ policies or practices amount to “disparate impact” on segments of the population, the lenders may be in violation of fair lending laws.
See the CFPB’s Compliance Bulletin.
When it comes to discriminatory lending practices, here are some warning signs:

  • You are treated differently in person than on the phone.
  • You are discouraged from applying for credit.
  • You hear the lender make negative comments about race, national origin, sex, and other protected groups.
  • You are refused credit even though you qualify for it.
  • You are offered credit with a higher rate than the one you applied for, even though you qualify for the lower rate.
  • You are denied credit, but not given a reason why or told how to find out why.
  • Your deal sounds too good to be true.
  • You feel pushed or pressured to sign.

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