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Ecoa discrimination12/23/2023 ![]() ![]() Insurance companies are liable under the FHA for discriminating as to home insurance. Scope issues as to each of the credit discrimination statutes is examined at NCLC’s Credit Discrimination Chapter 2.Īctions can be brought not just against creditors, but also against loan brokers, car dealers, table lenders, pawnbrokers, and lenders purchasing installment sales agreements. Broad Scope of Credit Discrimination StatutesĬredit discrimination statutes have a broad scope, few exemptions, and apply to creditors, lessors, assignees, and arrangers of credit. Disparate impact law is examined at NCLC’s Credit Discrimination § 4.3. When a creditor claims such a legitimate business purpose, the person claiming discrimination must establish either that the purpose is not legitimate or that there are less discriminatory means of achieving the purpose. It can apply when a neutral policy, applied in a segregated marketplace, results in a discriminatory effect on a protected population.Ī practice with a disparate impact may not be illegal if a creditor has a legitimate business purpose for its action and that purpose may not be achieved by less discriminatory means. Disparate impact does not require knowledge or intent. “Disparate impact” discrimination occurs when a practice has a disproportionate discriminatory effect on a protected population. Illegal discrimination may also occur when the discrimination is not direct. Individuals who are treated differently because of one of these prohibited bases are subjected to discrimination that constitutes illegal “disparate treatment.” See NCLC’s Credit Discrimination § 4.2. See NCLC’s Credit Discrimination Chapter 3. Other bases for discrimination, such as sexual orientation or location of a residence, are also actionable under certain state discrimination statutes and can sometimes be actionable under the federal statutes. While there is variation by statute, one or more of the federal credit discrimination statutes prohibit discrimination on the basis of race, color, religion, national origin, sex, marital status, familial status, age, disability, public assistance status, and exercise of rights under federal consumer credit statutes. See generally NCLC’s Credit Discrimination § 11.8. Certain state credit discrimination statutes provide for minimum statutory damages state UDAP statutes often provide for treble damages or minimum statutory damages and attorney fees. These statutes provide for powerful consumer remedies, including recovery for humiliation, deprivation of rights, and damage to credit rating, as well as punitive damages, equitable relief, and attorney fees. §§ 19 apply to discrimination in commerce generally. The ECOA applies broadly to credit discrimination, the FHA applies to discrimination in mortgage lending, and the civil rights statutes 42 U.S.C. Power of Credit Discrimination StatutesĪ number of federal statutes address credit discrimination. Thus, ECOA claims will be the preferred route to raise disparate impact claims in credit practices, including home mortgage lending. At least for now, disparate impact claims under the Equal Credit Opportunity Act (ECOA) are not so restricted. Disparate impact claims under the FHA can apply to rental housing, home insurance, and home sales. ![]() The article then addresses the new September 3 rule, which severely restricts Fair Housing Act (FHA) disparate impact claims. Links to NCLC’s Credit Discrimination treatise are provided for more detail. This article surveys federal and state credit discrimination statutes and describes why they belong in every consumer attorney’s toolbox. With the national conversation concerning racial justice, the statutes are even more relevant today. Whether used to target predatory lending, differential pricing, aggressive collection tactics, or credit evaluation, these statutes taken as a whole allow for a choice of federal or state court, punitive and emotional distress damages, and attorney fees. Recent federal agency attempts to limit the power of credit discrimination statutes (including a September 3, 2020, Fair Housing Act rule) serve to underscore the effectiveness of credit discrimination statutes in remedying marketplace misconduct affecting communities of color and vulnerable consumers. ![]()
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