Under Director Chopra’s leadership, the CFPB has regularly been sounding alarms about the potential for discrimination arising from the use of so-called “black box” credit models that use algorithms or other artificial intelligence (AI) tools. Today, in the second of its recently-launched Consumer Financial Protection Circulars, the CFPB addresses ECOA adverse action notice requirements in
Fair Lending
OCC, FDIC, and Federal Reserve propose amendments to CRA regulations
By Scott A. Coleman on
After moving alone in 2020 to reform its Community Reinvestment Act (CRA) regulation, the Office of the Comptroller of the Currency (OCC) has joined the Federal Deposit Insurance Corporation (FDIC) and Federal Reserve Board in issuing a joint notice of proposed rulemaking setting forth proposed amendments to their regulations implementing the CRA. The action follows…
CFPB issues annual fair lending report
By Michael Gordon & John L. Culhane, Jr. on
The CFPB recently issued its annual fair lending report covering its fair lending activity in 2021.
In the report’s discussion of its risk-based approach for prioritizing fair lending supervisory and enforcement activity, the CFPB indicates that much of its enforcement and supervision efforts were focused on advancing its priorities of advancing racial and economic equity…
CFPB issues advisory opinion affirming ECOA’s application to existing borrowers
The CFPB has issued a new advisory opinion “to affirm that the Equal Credit Opportunity Act (ECOA) and Regulation B protect those actively seeking credit and those who sought and received credit.”
The ECOA defines an “applicant” to mean “any person who applies to a creditor directly for an extension, renewal, or continuation of credit…
FTC announces $10 million settlement with auto dealerships for alleged unlawful add-on charges and discriminatory conduct
By John L. Culhane, Jr. on
The FTC has announced the settlement of a lawsuit filed jointly with the Illinois Attorney General against a group of auto dealerships that alleged the dealerships violated federal and state law by engaging in deceptive practices in connection with add-on charges and by discriminating against Black consumers in connection with the financing of vehicle purchases. …
Lawsuit filed in CA federal district court alleges unlawful discrimination based on credit union’s denial of loan application from DACA recipient
By John L. Culhane, Jr. on
Posted in Fair Lending, Litigation and Court Decisions
In a new lawsuit filed in a California federal district court, a recipient of Deferred Action for Childhood Arrivals (DACA) alleges that a credit union violated the Civil Rights Act of 1866 (42 U.S.C. § 1981) and California’s Unruh Civil Rights Act (UCRA) by denying her loan application based on her status as a DACA…
CFPB updates examination manual to use UDAAP authority to target discriminatory practices, including those involving non-credit products or services
Consistent with expectations that the CFPB under Director Chopra’s leadership would take an expansive view of its statutory authorities, the CFPB has announced its intention to use its authority to prohibit unfair, deceptive, or abusive acts or practices (UDAAPs) to target discriminatory conduct, even where fair lending laws may not apply.
Specifically, the CFPB is…
FTC issues annual ECOA report to CFPB
By John L. Culhane, Jr. on
On February 4, 2022, the FTC sent its annual letter to the CFPB reporting on the FTC’s activities related to the Equal Credit Opportunity Act (ECOA) and Regulation B. The Bureau includes the FTC’s annual letter in its own annual report to Congress on the ECOA.
The FTC has authority to enforce the ECOA and…
CFPB SBREFA Panel Outline on AVM Rulemaking Addresses Potential for Algorithmic Bias In Home Valuations
By Richard J. Andreano, Jr. on
The CFPB recently issued an outline entitled Small Business Advisory Review Panel for Automated Valuation Model (AVM) Rulemaking. While the outline addresses an upcoming joint rulemaking to implement quality control requirements for AVMs, the CFPB specifically focuses on the potential for AVMs to pose fair lending risks to homebuyers and homeowners. The CFPB issued the…
CFPB files another status report in Section 1071 rulemaking lawsuit; Republican lawmakkers send letter to Director Chopra on rulemaking and introduce bills to amend ECOA
By John L. Culhane, Jr. on
On February 22, 2022, the CFPB filed its eighth status report with the California federal district court hearing the lawsuit brought by the California Reinvestment Coalition, National Association for Latino Community Asset Builders, and two individual plaintiffs in 2019. The purpose of the suit was to force the Bureau to issue a proposal implementing the…