Discriminatory lenders beware: Consumer watchdog is cracking down
Lenders who discriminate on the basis of certain demographics when dealing with auto loans, mortgages, credit cards, student loans and more are now in the cross hairs of the new Consumer Financial Protection Bureau.
The watchdog declared war Wednesday against unfair lending practices that price out, reject or otherwise put certain consumers at a disadvantage.
Even lenders who don’t intend to be biased but whose policies end up cutting off certain portions of the population – known as disparate impact – will be taken down, bureau officials said.
Under the Equal Credit Opportunity Act, companies may not base lending decisions on factors such as race, religion, gender and more.
“We want consumers to avoid the marketplace’s silent pickpocket: discrimination,” Director Richard Cordray said in a statement.
The watchdog also put up a tip sheet for consumers listing warning signs. In recent months, authorities have gone after Wells Fargo & Co., Bank of America Corp. and other institutions with accusations that they engaged in discriminatory mortgage-lending practices, including charging minority customers excessive interest rates and fees.
“Discrimination is not always obvious,” Patrice Ficklin, assistant director for the consumer bureau’s office of fair lending and equal opportunity, wrote in a blog post.
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