NCUA: Clarification of Equal Credit Opportunity Act

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On June 1, the National Credit Union Administration (NCUA) released a regulatory alert (21-RA-07) reminding credit unions of a recently issued Consumer Financial Protection Bureau’s (CFPB) interpretive rule which clarifies that the prohibition against sex discrimination under the Equal Credit Opportunity Act (ECOA) and Regulation B includes 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 interpretive rule became effective on March 16, 2021.

The CFPB stated the interpretive rule is consistent with the 2020 United States Supreme Court ruling in Bostock v. Clayton County, Georgia, that holds the prohibition against sex discrimination in Title VII of the Civil Rights Act of 1964 encompasses sexual orientation discrimination and gender identity discrimination.

The interpretive rule clarifies that ECOA and Regulation B cover discrimination against individuals, not merely groups. It 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.

Some state laws already prohibit discrimination in credit transactions based on sexual orientation or gender identity.

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.

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