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Compliance: Regulatory Alert covers ECOA interpretive rule

June 7, 2021

NCUA’s latest Regulatory Alert (21-RA-07) covers the March 16 interpretive rule from the Consumer Finance Protection Bureau (CFPB) clarifying that the prohibition against sex discrimination in the Equal Credit Opportunity Act (ECOA) encompasses 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 interpretive rule became effective on March 16.

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.