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Civil Rights

CFPB: Lenders Can’t Discriminate on Basis of Sexual Orientation or Gender Identity

— March 11, 2021

The Consumer Financial Protection Bureau, or CFPB, has said it will enforce a federal ban on lenders who discriminate against applicants on the basis of sexual orientation or gender identity.

According to The Hill, the CFPB announced its decision on Tuesday.

In an official statement, the agency explained that it has interpreted the Equal Credit Opportunity Act as prohibiting lenders from rejecting credit services, loans, and advances to LGBT people.

“In issuing this interpretive rule, we’re making it clear that lenders cannot discriminate based on sexual orientation or gender identity,” said David Uejio, the agency’s acting director. “The CFPB will ensure that consumers are protected against such discrimination and provided equal opportunities in credit.”

The CFPB’s decision is based on a 2020 Supreme Court decision, in which the justices found that the Civil Rights Act of 1964—which broadly prohibits sex-based discrimination—also covers people of differing sexual orientations and gender identities.

Image of the CFPB Logo
CFPB Logo; image courtesy of the
Consumer Financial Protection Bureau via Wikimedia Commons,

“The CFPB will take enforcement action under ECOA to hold financial institutions accountable for their actions that violate ECOA. The CFPB also looks forward to working with Congress on the Equality Act, which, if enacted, would codify protections for consumers against sexual orientation and gender identity discrimination in all financial products and services,” the agency said.

Karen Loewy, senior counsel and senior strategist at Lambda Legal, told the Dallas Voice that the Supreme Court ruling—taken together with the CFPB’s announcement—represents a major step forward for LGBT Americans.

“While the Consumer Financial Protection Bureau previously had a track record of reading the ECOA’s sex discrimination protections to apply to LGBTQ people, this explicit interpretive rule renews and formalizes that commitment,” Loewy said. “This rule sends a clear message to all kinds of lenders — from giant banks and credit unions to payday lenders and mortgage brokers — that discriminating against LGBTQ people is off limits.

Loewy observed that past studies have shown that same-sex couples, as well as transgender individuals, are routinely offered less-favorable mortgage terms than heterosexual people with similar financial profiles.

“These denials exacerbate housing and economic vulnerability, preventing LGBTQ people from buying a home, leasing a car to drive to work or starting their own business enterprise. With this interpretive rule by the CFPB, LGBTQ people denied equal credit will have a clear route to getting that discrimination investigated and addressed,” Loewy said. “The rule bolsters the arguments we have successfully made about federal sex protections in court and makes the promise of Bostock manifest in the context of credit.”

The Department of Housing and Urban Development has also said that it will begin enforcement of the Fair Housing Act—which prohibits sex-based discrimination—to cases wherein renters or prospective home-owners are turned away due to their sexual orientation or gender identity.


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