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In early February, the Federal Trade Commission (FTC) sent its annual letter with the Consumer Financial Protection Bureau (CFPB). The letter explained FTC activities related to the Equal Credit Opportunity Act (ECOA) and ECOA Regulation B. Pursuant to a January 2012 memorandum of understanding between the CFPB and the FTC, and pursuant to the Dodd-Frank Act, the FTC continues to coordinate enforcement, rulemaking, and other activities pursuant to the ECOA .
Among other things, the Dodd-Frank Act made significant changes to the ECOA and other consumer laws, such as granting the CFPB regulatory and enforcement authority over the ECOA. . Under the Dodd-Frank Act, the FTC retained its authority to enforce the ECOA and Regulation B. In addition, the Dodd-Frank Act gave the FTC authority to enforce all applicable CFPB rules. Entities under the jurisdiction of the FTC, which include most providers of financial services that are not federal banks, thrifts, or credit unions.
The FTC’s annual letter noted only one development in the fair lending enforcement space. Specifically, the CFPB, FTC, Department of Justice, and Federal Reserve Board jointly filed an amicus brief with the United States Court of Appeals for the Seventh Circuit in Fralish vs. Bank of America One, NA In particular, the amicus brief requests that the Seventh Circuit reverse the district court’s ruling that a lender’s customer who previously received credit and was not currently applying for credit is not an “applicant” under the notice’s requirements Adverse Action Statement from ECOA.
Additionally, the FTC letter had more to say regarding fair lending research and policy development. In this space, the FTC discusses (1) a report released by the FTC in 2021, which noted differences in how fraud and other consumer issues affect communities of color; (2) the FTC’s Military Task Force’s continued work on military consumer protection issues and the role of FTC staff as liaison with the American Bar Association Standing Committee Legal Assistance to Military Personnel, which supports initiatives to provide legal assistance and services to military personnel. , veterans and their families; and (3) the FTC’s continued (a) service as a member of the Interagency Fair Lending Task Force with the CFPB, DOJ, HUD, and federal banking agencies, and (b) participation in the Interagency Fair Lending Methodologies Work Group, consisting of staff from the FTC, CFPB, DOJ, HUD, federal banking agencies, and the Federal Housing Finance Agency.
Finally, the FTC discussed in the letter the evolution of consumer and business education. The letter discusses the FTC’s efforts to provide education on important issues regarding Regulation B. These efforts include blog posts published by the FTC, one post for consumers, and two posts for businesses.
Take away food
Federal regulators continue to signal that fair loan enforcement will be a top priority. In particular, regulators have made it clear that they consider everything the phases of the lending process – from advertising to loss mitigation and all points in between – must be subject to the ECOA. Lenders should invest time and effort in strengthening their fair lending controls and should seriously consider performing fair lending and service audits on a regular basis.
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