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CFPB to Pursue Discriminatory Lenders

Bureau Targets Lending Practices that Unlawfully Price Out, Cut Off Specific Segments of the Population

WASHINGTON, D.C. – Today, the Consumer Financial Protection Bureau (CFPB) announced that it will use all available legal avenues, including disparate impact, to pursue lenders whose practices discriminate against consumers. The Bureau will equip consumers with the information they need to spot the warning signs of discrimination.

“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.”

Whether applying for an auto loan, credit card, student loan, mortgage, or other consumer credit product, consumers need to know their rights as well as the red flags that may indicate possible discrimination. The CFPB has compiled tips and warning signs to help consumers identify and avoid credit discrimination. The tips 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. Sometimes these practices meet a legitimate business need that cannot reasonably be achieved as well by means that are less disparate in their impact. But sometimes they do not.

Banks and nonbanks under Bureau supervision will be monitored for potential fair lending violations including practices with unlawful discriminatory effects. The Compliance Bulletin applies to all institutions under the Bureau’s jurisdiction and applies to credit products including mortgages, credit cards, student loans, and auto loans.

In 1994, the Department of Justice and several other federal agencies issued the Interagency Policy Statement on Discrimination in Lending. The agencies agreed that when lenders’ policies or practices are shown to have a disparate impact on segments of the population, the lenders may be in violation of fair lending laws.

Through its supervisory and enforcement functions, the Bureau will monitor lenders’ policies to protect consumers’ ability to access credit free from discrimination.

The CFPB’s Compliance Bulletin can be accessed at: In a