CFPB expands anti-discrimination oversight under UDAAP authority

The Consumer Financial Protection Bureau said it is expanding its “anti-discrimination efforts” beyond credit products to counter discriminatory practices “across the board in consumer finance.”

Background: The CFPB noted that it enforces Equal Credit Opportunity Act fair lending policies on extensions of credit as well as Consumer Financial Protection Act prohibitions against unfair, deceptive, and abusive acts and practices (UDAAPs).

Updated Manual: The CFPB published an updated exam manual for evaluating UDAAPs that notes discrimination may meet the criteria for “unfairness,” consumers can be harmed by discrimination regardless of whether it is intentional, and discrimination can be unfair regardless of whether the conduct is covered by the ECOA, such as denying access to a checking account to individuals of a particular race.

CFPB Exams: The CFPB said:

• It will scrutinize discriminatory conduct that violates federal prohibition against unfair practices in all consumer finance markets, including credit, servicing, collections, consumer reporting, payments, remittances, and deposits.

• It will closely examine financial institutions’ decision-making in advertising, pricing, and other areas to ensure companies are appropriately testing for and eliminating illegal discrimination.

• 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.

• The CFPB will look at how companies test and monitor their decision-making processes for unfair discrimination and discrimination under the ECOA.