CFPB Clarifies Sex Discrimination Includes Sexual Orientation and Gender Identity Discrimination

John Zasada, Compliance Consulting Director, Financial Institutions Group

On Mar. 9, 2021, the Consumer Financial Protection Bureau (CFPB) issued an interpretive rule clarifying the prohibition against sex discrimination under the Equal Credit Opportunity Act (ECOA) and Regulation B.

The interpretive rule makes it clear lenders are forbidden from discriminating based on sexual orientation or gender identity. The CFPB believes even though the term “sex” is not defined in ECOA or Regulation B, the prohibitions against discrimination on the basis of “sex” under ECOA and Regulation B are correctly interpreted and finds under ECOA and Regulation B:

• Sexual orientation discrimination and gender identity discrimination necessarily involve consideration of sex
• An applicant’s sex must be a “but for” cause of the injury, but need not be the only cause
• Discrimination against individuals, and not merely against groups, is covered

The interpretive rule is effective the date it is published in the federal register.

For assistance in assessing your institution’s compliance with ECOA and Regulation B, contact Doeren Mayhew’s regulatory compliance specialists.