Alert aims to clarify impact of Reg B interpretive rule

(June 4, 2021) Credit unions should ensure their policies, procedures, and training materials promote compliance with federal equal credit opportunity laws, and Regulation B administered by the CFPB, in line with a 2020 U.S. Supreme Court ruling, NCUA said this week.

In a Regulatory Alert (21-RA-07), NCUA noted that the March 16, 2021 interpretive ruling published by CFPB clarified the prohibition against sex discrimination in the Equal Credit Opportunity Act (ECOA). The alert stated that the act and the rule encompass discrimination based on sexual orientation and gender identity discrimination. “The interpretive rule also covers discrimination based on actual or perceived nonconformity with sex- or gender-based stereotypes, and discrimination based on an applicant’s associations,” the alert states.

It notes that the law and rule cover discrimination against individuals, not merely groups. The alert also states that sex discrimination “includes discrimination motivated by actual or perceived nonconformity with sex- or gender-based stereotypes, such as discrimination based on a lender’s perception that a customer’s attire does not accord with the customer’s perceived gender.”

The rule is consistent, the agency said, with the 2020 high court ruling in Bostock v. Clayton County, Ga. That ruling held that the prohibition against sex discrimination in Title VII of the Civil Rights Act of 1964 encompasses sexual orientation discrimination and gender identity discrimination.

“Some state laws already prohibit discrimination in credit transactions based on sexual orientation or gender identity,” the alert notes. “Credit unions should ensure their policies, procedures, and training materials promote compliance with ECOA and Regulation B consistent with the interpretive rule. Credit unions should also review automated scoring, decisioning, and pricing models for variables that could be proxies for these prohibited bases.”

NASCUS will develop a (members only) summary of the alert.

LINK:
NCUA Reg Alert: Equal Credit Opportunity Act (Regulation B)