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CFPB targets unfair discrimination in consumer finance

The Consumer Financial Protection Bureau (CFPB), a US government agency, has announced changes to its supervisory operations aimed at better protecting families and communities from illegal discrimination, including in instances where fair lending laws do not apply.

CFPB will scrutinise discriminatory behaviour that violates the federal prohibition on unfair practises while examining banks’ and other companies’ compliance with consumer protection rules. CFPB will scrutinise financial institutions’ advertising, pricing, and other decisions to ensure that they are properly testing for and eliminating illegal discrimination.

The CFPB enforces several laws that can target discriminatory practices. Government regulators and private plaintiffs have commonly relied on the Equal Credit Opportunity Act (ECOA), a fair lending law which covers extensions of credit. However, certain discriminatory practices may also trigger liability under the Consumer Financial Protection Act (CFPA), which prohibits unfair, deceptive and abusive acts and practices (UDAAPs).

The CFPB will examine for discrimination in all consumer finance markets, including credit, servicing, collections, consumer reporting, payments, remittances, and deposits. CFPB examiners will require supervised companies to show their processes for assessing risks and discriminatory outcomes, including documentation of customer demographics and the impact of products and fees on different demographic groups.

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