Discrimination for sexual orientation, gender identity prohibited, bureau clarifies in rule

Discrimination for sexual orientation or gender identity is prohibited under equal credit opportunity regulations, the federal consumer financial protection agency said Tuesday.

The subhead for the press release announcing the rule issued by the agency read that the financial industry “is on notice that (the) Bureau will not tolerate illegal discrimination against the LGBTQ+ community.”

In an interpretive rule intended to clarify prohibitions under regulations implementing the Equal Credit Opportunity Act (ECOA), Consumer Financial Protection Bureau (CFPB) Acting Director Dave Uejio said the action is to make clear that lenders cannot discriminate based on sexual orientation or gender identity.

The bureau said discrimination includes that based on actual or perceived nonconformity with traditional sex- or gender-based stereotypes; and discrimination based on an applicant’s social or other associations.

“The CFPB will ensure that consumers are protected against such discrimination and provided equal opportunities in credit,” Uejio said in a release. The agency also indicated that it would take enforcement actions under the ECOA “to hold financial institutions accountable for their actions that violate ECOA.”

The bureau stated that in 2016 it held that the law supports arguments that the prohibition against sex discrimination also affords broad protection from discrimination based on an applicant’s sexual orientation and gender identity under the ECOA (which is implemented by the bureau’s Regulation B).

“On June 15, 2020, the U.S. Supreme Court issued a landmark decision in Bostock v. Clayton County, Georgia, 140 S. Ct. 1731, 207 L. Ed. 2d 218 (2020), holding that the prohibition against sex discrimination in Title VII of the Civil Rights Act of 1964 encompasses sexual orientation discrimination and gender identity discrimination,” the bureau stated in its release Tuesday.

The agency also noted that last July, it issued a request for information (RFI) to solicit public comments and information to identify opportunities to prevent credit discrimination and encourage responsible innovation under the ECOA and Regulation B. Among the questions posed, the agency said, was one on whether the Bostock decision should affect how the CFPB interprets the ECOA.

The bureau said Tuesday’s interpretive rule is consistent with last year’s high court decision and that it is also supported by public comments received in response to the RFI from last year.

“The CFPB will review its publications and examination guidance documents and, if needed, update these and other materials to reflect this interpretive rule,” the bureau stated.

The CFPB also said it looked forward to working in support of the Equality Act, a bill introduced in the 115th Congress to “prohibit discrimination on the basis of sex, gender identity, and sexual orientation,” among other things.

CFPB Clarifies That Discrimination by Lenders on the Basis of Sexual Orientation and Gender Identity Is Illegal