WASHINGTON, D.C. – A federal district court judge in Texas ruled last Friday that the Consumer Financial Protection Bureau (CFPB) may not monitor companies that provide checking accounts and other non-credit financial services to ensure they are not discriminating based on protected characteristics, such as a person’s race, religion, or sex. The CFPB had pointed to this discrimination as also constituting an unfair practice that it can identify, prohibit, and prosecute, which the law authorizes the CFPB to do.

“Illegal discrimination fits the commonsense definition of an unfair practice. To suggest otherwise defies both logic and the law, while ignoring the substantial harms that consumers face because of these unfair practices,” said Mitria Spotser, director of federal policy and vice president at the Center for Responsible Lending. “This deeply flawed ruling ignores precedent and inappropriately stops the Executive Branch from enforcing well-established legal protections. We support the CFPB’s effort to appeal the lower court’s ruling and urge the Fifth Circuit Court of Appeals to overturn the decision.”

“This court, and the banking trade groups that turned to it, ought to be deeply embarrassed by this ruling,” said Rob Randhava, senior counsel with The Leadership Conference on Civil and Human Rights. “If illegal discrimination based on factors like race isn’t ‘unfair,’ then it’s hard to imagine what is.”

Additional Background

Fair lending laws prohibit discrimination, based on protected characteristics, around the extension of credit. However, there are an array of non-credit financial services – such as payments, remittances, for-profit colleges, credit reporting, checking accounts, and financial advice – where discrimination based on protected characteristics may not be covered by fair lending laws but is still unlawful. In addition to the CFPB, the Federal Deposit Insurance Corporation and the Federal Trade Commission have explicitly informed companies of this responsibility for complying with the law.

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Press Contact: matthew.kravitz@responsiblelending.org