Overview
- The CFPB, which finalized the changes on Tuesday, April 22, set an effective date of July 21.
- The rule removes disparate impact as a basis for Equal Credit Opportunity Act cases, narrows what counts as illegal discouragement in marketing, and adds new limits on for-profit special-purpose credit programs.
- For-profit lenders can no longer use race, sex, or national origin as eligibility criteria for these targeted programs, and the Bureau added further limits on using any shared traits to qualify borrowers.
- The Bureau said neutral rules violate the ECOA only when they act as stand-ins for protected traits and are used with discriminatory intent, and it expanded official guidance on credit-scoring systems.
- The CFPB logged about 64,500 public comments, with most from consumer advocates, state attorneys general, and some members of Congress opposing the shift, while many industry groups backed it as closer to the statute; legal analysts also highlight a recent Fourth Circuit case allowing a disparate-impact suit as a sign courts will now have to square that ruling with the new standard.