WASHINGTON— The Consumer Financial Protection Bureau (CFPB) and the Justice Department have issued a joint statement that reminds financial institutions that “all credit applicants are protected from discrimination on the basis of their national origin, race, and other characteristics covered by the Equal Credit Opportunity Act, regardless of their immigration status.”
The CFPB and Justice Department said they have issued the statement because consumers have reported being rejected for credit cards as well as for auto, student, personal, and equipment loans because of their immigration status, even when they have strong credit histories and ties to the United States and are otherwise qualified to receive the loans.
While the Equal Credit Opportunity Act allows a creditor to consider an applicant’s immigration status when necessary to ascertain the creditor’s rights regarding repayment, creditors should be aware that unnecessary or overbroad reliance on immigration status, including when that reliance is based on bias, may run afoul of the law, the two agencies said.
Blanket Denials
According to the two agencies, some financial institutions have maintained blanket policies denying credit to individuals based on their immigration status, regardless of their personal circumstances and demonstrated ability to repay, arguing that the Equal Credit Opportunity Act, and the regulation that implements it, protect them whenever they consider immigration status in making a credit decision.
“Others have incorrectly claimed that the Act shields lenders from liability under other federal and state civil rights laws that bar discrimination on the basis of someone’s status as an immigrant or noncitizen,” the agencies said.
‘Overbroad Reliance’
The joint statement further explains that while the Equal Credit Opportunity Act allows creditors to consider immigration status when necessary to ascertain the creditor’s rights regarding repayment, unnecessary or overbroad reliance on immigration status may violate the Act’s prohibition of discrimination on the basis of national origin, race or another prohibited basis.
The joint statement also confirms that neither the Equal Credit Opportunity Act nor its regulations provide companies a safe harbor with respect to other laws barring discrimination on the basis of immigration status.
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