Regulation B (ECOA) - Explained
What is Regulation B of Equal Credit Opportunity Act?
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Table of ContentsRegulation B (Lending Discrimination) DefinitionA Little More on What is Regulation B of the Equal Credit Opportunity ActAcademic Research
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Regulation B (Lending Discrimination) Definition
Regulation B is a provision of the Equal Credit Opportunity Act that protects borrowers (or applicants) from discrimination by lenders based on race, gender, religion, national origin, age or marital status.
What Does the Regulation B of the Equal Credit Opportunity Act Do?
Regulation B (12 CFR 1002.01-.16) prohibits discrimination in any aspect of a credit transaction (consumer transaction, business transaction, mortgage, credit line, refinancing, refinancing, applications, credit standards, investigation procedures, or termination of credit) by providing rules that lenders must follow when collecting and processing credit information from a prospective borrower. The Consumer Financial Protection Bureau is currently charged with implementing the provisions of regulation B. The Regulation imputes the following rules:
- No discriminations based on race, marital status, nationality, gender, age or religion.
- No discrimination based on receiving income from public assistance.
- Notice of rejection (and explanation for reason and how to request additional info) within 30 days.
- Spouses also have rights to this information.
- Cannot collect information on spouses except in limited circumstances (community property state, the spouse is a co-applicant, the spouse will use or be liable on the account, or the applicant receives financial support/alimony from the other spouse).
- No retaliation for exercising ones rights under the Consumer Protection Act.
- Punitive damages of up to $10k for failure to comply.
- In a class action, a lender could be subject to a penalty of $500,000 or 1% of the creditors net worth.
A lender may request information about race, marital status, nationality, gender, age or religion for specified legitimate (bona fide) purposes. This may relate to legal capacity to sign a contract, familial obligations affecting ones ability to make payments.
- Truth in Lending Act
- Fair Debt Collection Practices Act
- Fair Credit Billing Act
- Electronic Funds Transfer Act
- Electronic Funds Transfers (EFT)
- Equal Credit Opportunity Act
- Regulation B
- Consumer Credit Protection Act
- Consumer Advisory Council
Consumer Financial Protection Act
- Consumer Product Safety Act
- Consumer Product Labeling Laws
- Credit Repair Organization Act
- Federal Food, Drug, and Cosmetic Act
- Magnuson-Moss Warranty Act
- Privacy Act of 1974 (Privacy Act)
- Personally Identifiable Information
- Right to Financial Privacy Act of 1978 (RFPA)
- Electronic Communication Privacy Act of 1986 (ECPA)
- Childrens Online Privacy Protection Act of 1986 (COPPA)
- CAN SPAM Act