Alert aims to clarify reach to credit unions of equal credit opportunity rule, high court decision

Credit unions should ensure their policies, procedures, and training materials promote compliance with federal equal credit opportunity laws and Regulation B, which is administered by the federal consumer financial protection agency, in line with a 2020 U.S. Supreme Court ruling, the federal regulator of credit unions advised Tuesday.

In a Regulatory Alert, the National Credit Union Administration (NCUA) noted that the March 16, 2021, interpretive ruling published by the Consumer Financial Protection Bureau (CFPB) clarified the prohibition against sex discrimination in the Equal Credit Opportunity Act (ECOA) and implemented by the bureau’s Reg B.

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. 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.”

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.”

Equal Credit Opportunity Act (Regulation B)

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