DOJ, CFPB remind FIs that ECOA protects credit applicants regardless of immigration status

The Equal Credit Opportunity Act’s (ECOA) protections against discrimination apply regardless of a credit applicant’s immigration status, the Consumer Financial Protection Bureau (CFPB) and the Department of Justice (DOJ) underscored in a joint statement Wednesday.

The CFPB and DOJ noted that all credit applicants are protected from discrimination on the basis of their national origin, race, and other characteristics covered by the ECOA regardless of their immigration status. The reason for Wednesday’s statement, they said, is that consumers have reported being rejected for credit cards as well as for auto, student, personal, and equipment loans because of their immigration status, even when they have strong credit histories and ties to the United States and are otherwise qualified to receive the loans.

The ECOA and Regulation B do not expressly prohibit consideration of immigration status, the statement notes, but they “do prohibit creditors from using immigration status to discriminate on the basis of national origin, race, or any other protected characteristic.” Reg B, it says, “notably provides that a ‘creditor may consider [an] applicant’s immigration status or status as a permanent resident of the United States, and any additional information that may be necessary to ascertain the creditor’s rights and remedies regarding repayment.’” It does not, however, provide a safe harbor for all consideration of immigration status, the statement says.

“For example, if a creditor has a blanket policy of refusing to consider applications from certain groups of noncitizens regardless of the credit qualifications of individual borrowers within that group, that policy may risk violating ECOA and Regulation B,” the joint statement reads. “This risk could arise because some individuals within those groups may have sufficient credit scores or other individual circumstances that may resolve concerns about the creditor’s rights and remedies regarding repayment.”

The statement notes other situations in which a violation may occur, such as when a creditor uses the length of time a person has had a social security number as a “proxy” for citizenship or immigration status (in turn possibly harming someone with a protected characteristic) or requiring certain types of documentation only from certain groups of non-citizens.

Read the joint statement for more details.

Release: CFPB and Justice Department Issue Joint Statement Cautioning that Financial Institutions May Not Use Immigration Status to Illegally Discriminate Against Credit Applicants

Joint statement by Department of Justice, CFPB