[Federal Register Volume 86, Number 49 (Tuesday, March 16, 2021)]
[Rules and Regulations]
[Pages 14363-14366]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-05233]



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 Rules and Regulations
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  Federal Register / Vol. 86, No. 49 / Tuesday, March 16, 2021 / Rules 
and Regulations  

[[Page 14363]]



BUREAU OF CONSUMER FINANCIAL PROTECTION

12 CFR Part 1002


Equal Credit Opportunity (Regulation B); Discrimination on the 
Bases of Sexual Orientation and Gender Identity

AGENCY: Bureau of Consumer Financial Protection.

ACTION: Interpretive rule.

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SUMMARY: The Bureau of Consumer Financial Protection (Bureau) is 
issuing this interpretive rule to clarify that, with respect to any 
aspect of a credit transaction, the prohibition against sex 
discrimination in the Equal Credit Opportunity Act (ECOA) and 
Regulation B, which implements ECOA, encompasses sexual orientation 
discrimination and gender identity discrimination, including 
discrimination based on actual or perceived nonconformity with sex-
based or gender-based stereotypes and discrimination based on an 
applicant's associations.

DATES: This interpretive rule is effective on March 16, 2021.

FOR FURTHER INFORMATION CONTACT: Pavy Bacon, Senior Counsel, Office of 
Regulations at 202-435-7700. If you require this document in an 
alternative electronic format, please contact 
[email protected].

SUPPLEMENTARY INFORMATION:

I. Background

    The Bureau is responsible for administering and enforcing ECOA \1\ 
and its implementing Regulation B.\2\ ECOA makes it ``unlawful for any 
creditor to discriminate against any applicant, with respect to any 
aspect of a credit transaction,'' on several enumerated bases, 
including ``on the basis of . . . sex . . . '' \3\ Likewise, Regulation 
B prohibits a creditor from discriminating against an applicant on a 
prohibited basis (including ``sex'' \4\) ``regarding any aspect of a 
credit transaction,'' and from making ``any oral or written statement 
to applicants or prospective applicants that would discourage on a 
prohibited basis a reasonable person from making or pursuing an 
application.'' \5\
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    \1\ 15 U.S.C. 1691-1691f.
    \2\ 12 CFR part 1002.
    \3\ 15 U.S.C. 1691(a)(1).
    \4\ 12 CFR 1002.2(z).
    \5\ 12 CFR 1002.4(a)-(b).
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    On June 15, 2020, in Bostock v. Clayton County, Georgia, the 
Supreme Court ruled that the prohibition against sex discrimination in 
Title VII of the Civil Rights Act of 1964 (Title VII) encompasses 
sexual orientation discrimination and gender identity 
discrimination.\6\ The Court relied on three key findings to reach its 
decision: (1) Sexual orientation discrimination and gender identity 
discrimination necessarily involve consideration of sex; (2) Title 
VII's language requires sex to be a ``but for'' cause of the injury, 
but need not be the only cause; and (3) Title VII's language covers 
discrimination against individuals, and not merely against groups.\7\
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    \6\ Bostock v. Clayton Cty., Georgia, 140 S. Ct. 1731, 207 L. 
Ed. 2d 218 (2020).
    \7\ Id.
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    In response to Executive Order 13988, ``Preventing and Combatting 
Discrimination on the Basis of Gender Identity or Sexual 
Orientation'',\8\ which addresses Bostock, Jeanine M. Worden, Acting 
Assistant Secretary for Fair Housing & Equal Opportunity, released a 
memorandum directing the Office of Fair Housing and Equal Opportunity 
of the U.S. Department of Housing and Urban Development to take the 
actions to administer and fully enforce the Fair Housing Act to 
prohibit discrimination because of sexual orientation and gender 
identity.\9\
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    \8\ 86 FR 7023 (Jan. 25, 2021).
    \9\ U.S. Dep't. of Hous. and Urban Dev., Memorandum, 
Implementation of Executive Order 13988 on the Enforcement of the 
Fair Housing Act (Feb. 11, 2021), https://www.hud.gov/sites/dfiles/PA/documents/HUD_Memo_EO13988.pdf.
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    Before the issuance of the Bostock opinion, at least twenty states 
and the District of Columbia prohibited discrimination on the bases of 
sexual orientation and/or gender identity either in all credit 
transactions or in certain (e.g., housing-related) credit 
transactions.\10\ As such, financial institutions subject to such laws 
were required to comply with those requirements prior to the issuance 
of the Bostock opinion. Many financial institutions recognize sexual 
orientation and/or gender identity to be protected classes under State 
laws \11\ and may have determined to incorporate practices that 
prohibit discrimination on these bases.\12\
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    \10\ While not intended to be an all-inclusive list, the State 
statutes include Cal. Civ. Code secs. 51, 51.5; Cal. Gov't Code sec. 
12955; Colo. Rev. Stat. sec. 24-34-501(3); Colo. Rev. Stat. sec. 5-
3-210; Conn. Gen. Stat. secs. 46a-81e, 46a-81f, 46a-98; Del. Code 
Ann. tit. 6, sec. 4604; D.C. Code sec. 2-1402.21; Haw. Rev. Stat 
secs. 515-3, 515-5; 775 Ill. Comp. Stat. sec. 5/1-102(A), 5/1-
103(O), (O1), and (Q), 5/4-102, 5/3-102, 5/4-103; Iowa Code secs. 
216.8A, 216.10; Me. Rev. Stat. tit. 5, sec. 4553(5-C) and (9-C), 
4595 to 4598, 4581 to 4583; Md. Code Ann, State Gov't secs. 20-705, 
20-707, 20-1103; Mass. Gen. Laws ch. 151B, sec. 4(3B), (14); Minn. 
Stat. secs. 363A.03 (Subd. 44), 363A.09(3), 363A.16 (Subds.1 and 3), 
363A.17; N.H. Rev. Stat. Ann. sec. 354-A:10; N.J. Stat. Ann. sec. 
10:5-12(i); N.M. Stat. Ann. sec. 28-1-7; N.Y. Civ. Rights Law sec. 
40-c(2); N.Y. Exec. Law sec. 296-A; Or. Rev. Stat. secs. 174.100(7), 
659A.421; R.I. Gen. Laws secs. 34-37-4(a) through (c), 34-37-4.3, 
34-37-5.4; Va. Code Ann. sec. 6.2-501(B)(1); 15.2-853; 15.2-965; Vt. 
Stat. Ann. tit. 8, sec. 10403; Vt. Stat. Ann. tit. 9, sec. 2362, 
2410, 4503(a)(6); Wash. Rev. Code sec. 49.60.030, 49.60.040 (14), 
(26), and (27), 49.60.175, 49.60.222; Wis. Stat. secs. 106.50, 
224.77(1)(o). Also, since Bostock, the North Dakota Department of 
Labor and Human Rights has interpreted the North Dakota statutes 
against sex discrimination to include sexual orientation and gender 
identity discrimination. N.D. Dep't of Lab. and Hum. Rts. (NDDOLHR), 
NDDOLHR Now Accepting and Investigating Charges of Discrimination 
Based on Sexual Orientation and Gender Identity (June 18, 2020), 
https://www.nd.gov/labor/news/nddolhr-now-accepting-and-investigating-charges-discrimination-based-sexual-orientation-and. 
There are also a number of municipalities that include sexual 
orientation and/or gender identity in their credit discrimination 
ordinances. See, e.g., Austin City Code sec. 5-1-1 et seq.; N.Y.C. 
Admin. Code secs. 8-101, 8-107 et seq.; S.F. Police Code, sec. 
3304(a) et seq.
    \11\ See Consumer Bankers Ass'n (CBA), Comment Letter on Request 
for Information on the Equal Credit Opportunity Act and Regulation B 
(RFI), Document No. CFPB-2020-0026-0147 (Dec. 1, 2020) (``Many CBA 
members currently consider sexual orientation and gender identity to 
be protected classes under [S]tate laws, therefore, potential post 
Bostock changes to how the Bureau interprets ECOA's prohibition on 
discrimination on the basis of sex would likely align with, and 
would not significantly alter, practices that comply with state 
laws.'').
    \12\ See, e.g., Off. of the Comptroller of the Currency, 
Interpretive Letter #998 (Mar. 9, 2004), https://www.occ.gov/topics/charters-and-licensing/interpretations-and-actions/2004/int998.pdf 
(``[W]hat would generally be understood to be an `anti-
discrimination' law . . . [e.]g., laws that prohibit lenders from 
discriminating on the basis of race, religion, ethnicity, gender, 
sexual orientation, disability, or the like . . . would not be 
preempted.'') (emphasis in original); Nat'l Cmty. Reinvestment 
Coal., Comment Letter on RFI, Document No. CFPB-2020-0026-0123 (Dec. 
1, 2020) (noting that ``defense attorneys have already informed the 
mortgage industry that as more State laws incorporate this robust 
definition of sex, they should incorporate it into their policies 
and procedures'') (citation omitted).

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[[Page 14364]]

    The Bureau has previously indicated that legal developments would 
lead to prohibitions against sex discrimination being interpreted to 
afford broad protection against discrimination on the bases of sexual 
orientation and gender identity. In 2016, in response to an inquiry 
from Services & Advocacy for GLBT Elders (SAGE), the Bureau sent a 
letter addressing coverage of sex discrimination involving sexual 
orientation and gender identity under ECOA.\13\ The letter to SAGE 
concluded that ``the current state of the law supports arguments that 
the prohibition of sex discrimination in ECOA and Regulation B affords 
broad protection against credit discrimination on the bases of gender 
identity and sexual orientation, including but not limited to 
discrimination based on actual or perceived nonconformity with sex-
based or gender-based stereotypes as well as discrimination based on 
one's associations.'' \14\ Further, the letter to SAGE stated that the 
Bureau ``will continue to monitor these legal developments closely as 
we strive to ensure that our interpretation and application of laws and 
rules under our jurisdiction, including ECOA and Regulation B, 
appropriately reflect the evolving precedents interpreting sexual 
discrimination law.'' \15\ The Bureau also incorporated its views 
regarding sex discrimination under ECOA and Regulation B into its ECOA 
brochure and AskCFPB materials.\16\
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    \13\ See Letter from Bureau of Consumer Fin. Prot., to Serv. & 
Advocacy for GLBT Elders (SAGE), (Aug. 30, 2016), https://files.consumerfinance.gov/f/documents/cfpb_sage-response-letter_2021-02.pdf.
    \14\ Id. at 7.
    \15\ Id.
    \16\ See Bureau of Consumer Fin. Prot., Helping consumers 
understand credit discrimination (Mar. 2017), https://files.consumerfinance.gov/f/documents/201703_cfpb_handout_ECOA_helping_consumers.pdf; Bureau of Consumer 
Fin. Prot., What protections do I have against credit 
discrimination?, https://www.consumerfinance.gov/fair-lending/. 
(Both state: ``Currently, the law supports arguments that the 
prohibition against sex discrimination also affords broad protection 
from discrimination based on a consumer's gender identity and sexual 
orientation.''). The Bureau will update these and other materials to 
reflect this interpretive rule.
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    After the Supreme Court issued the Bostock opinion, diverse 
stakeholders asked the Bureau to clarify that ECOA's and Regulation B's 
prohibition of ``sex'' discrimination includes discrimination on the 
bases of sexual orientation and/or gender identity. Many comments to 
the Bureau's recent Request for Information on the Equal Credit 
Opportunity Act and Regulation B (RFI) \17\ from a variety of 
stakeholders, including consumer and civil rights advocates, a local 
government official, an academic institution, and industry 
representatives, reiterated this request for regulatory 
clarification.\18\ The Bureau is issuing this interpretive rule to 
address any regulatory uncertainty that may still exist under ECOA and 
Regulation B as to the term ``sex'' so as to ensure the fair, 
equitable, and nondiscriminatory access to credit for both individuals 
and communities and to ensure that consumers are protected from 
discrimination.\19\ This interpretive rule serves a stated purpose of 
Regulation B, which is to ``promote the availability of credit to all 
creditworthy applicants without regard to . . . sex . . . '' \20\
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    \17\ 85 FR 46600 (Aug. 3, 2020).
    \18\ See, e.g., Nat'l Fair Hous. All., Comment Letter on RFI, 
Document No. CFPB-2020-0026-0137 (Dec. 1, 2020); City of Houston, 
City Controller, Comment Letter on RFI, Document No. CFPB-2020-0026-
0120 (Dec. 1, 2020); Steven Trovarelli, Comment Letter on RFI, CFPB-
2020-0026-0051 (Oct. 1, 2020); Anonymous, Comment Letter on RFI, 
Document No. CFPB-2020-0026-0064- (Nov. 3, 2020); Consortium for 
Citizens with Disabilities Fin. Sec. & Poverty Task Force, Comment 
Letter on RFI, Document No. CFPB-2020-0026-0104- (Dec. 1, 2020); 
Nat'l Women's Law Ctr., Comment Letter on RFI, Document No. CFPB-
2020-0026-0112-A1 (Dec. 1, 2020); Cmty. Dev. Bankers Ass'n (CDBA), 
Comment Letter on RFI, Document No. CFPB-2020-0026-0113 (Dec. 1, 
2020); Mortg. Bankers Ass'n, Comment Letter on RFI, Document No. 
CFPB-2020-0026-0115 (Dec. 1, 2020); Nat'l Cmty. Reinvestment Coal., 
Comment Letter on RFI, Document No. CFPB-2020-0026-0123 (Dec. 1, 
2020); LendingClub, Comment Letter on RFI, Document No. CFPB-2020-
0026-0126 (Dec. 2, 2020); Nat'l Consumer Law Ctr., Comment Letter on 
RFI, Document No. CFPB-2020-0026-0129-A1 (Dec. 2, 2020); The 
Williams Institute, Comment Letter on RFI, Document No. CFPB-2020-
0026-0132 (Dec. 2, 2020); Nat'l Disability Rts. Network, Comment 
Letter on RFI, Document No. CFPB-2020-0026-0139 (Dec. 2, 2020); 
Serv. & Advocacy for GLBT Elders (SAGE), Comment Letter on RFI, 
Document No. CFPB-2020-0026-0141 (Dec. 2, 2020); Ctr. for Am. 
Progress, Comment Letter on RFI, Document No. CFPB-2020-0026-0144 
(Dec. 2, 2020); Consumer Bankers Ass'n, Comment Letter on RFI, 
Document No. CFPB-2020-0026-0147 (Dec. 2, 2020).
    \19\ 12 U.S.C. 5493(c)(2)(A), 5511(b)(2).
    \20\ 12 CFR 1002.1(b).
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II. Discussion

    The Bureau interprets the ECOA and Regulation B prohibitions 
against discrimination on the basis of ``sex'' to include 
discrimination based on sexual orientation and/or gender identity. The 
Bureau's interpretation is consistent with the Court's conclusion in 
Bostock regarding sex discrimination under Title VII.\21\
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    \21\ See Bostock, 140 S. Ct. 1731.
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    It is well established that ECOA and Title VII are generally 
interpreted consistently.\22\ Like Title VII,\23\ ECOA prohibits sex 
discrimination (among other bases) and does not require that sex (or 
other protected characteristics) be the sole or primary reason for an 
action to be discriminatory.\24\ Like Title VII,\25\ ECOA applies to 
sex discrimination against individuals, not just to situations where 
all men or all women (or any other group of people with a common 
protected characteristic) are discriminated against

[[Page 14365]]

categorically.\26\ Indeed, Regulation B clarifies that ECOA prohibits 
discrimination based not only on the characteristics of an applicant 
but also based on the characteristics of a person with whom an 
applicant associates.\27\
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    \22\ See, e.g., Equal Credit Opportunity Act Amendments of 1976, 
Public Law 94-239, 114 Stat. 246 (1976); S. Rep. 94-589, at 4-5 
(1976), reprinted in 1976 U.S.C.C.A.N. 403. (``judicial 
constructions of anti-discrimination legislation in the employment 
field . . . are intended to serve as guides in the application of 
this [Equal Credit Opportunity] Act''); Mercado-Garcia v. Ponce Fed. 
Bank, 979 F.2d 890, 893 (1st Cir. 1992) (applying Title VII 
standards in interpreting ECOA); Bhandari v. First Nat'l Bank of 
Commerce, 808 F.2d 1082, 1100 (5th Cir. 1987) (same); Rosa v. Park 
W. Bank & Tr. Co., 214 F.3d 213, 215 (1st Cir. 2000) (``look[ing] to 
Title VII case law'' and reversing the dismissal of a sex 
discrimination claim filed by a transgender person who alleged being 
denied a loan application for failing to appear in clothing 
consistent with the sex reflected on their identification cards). 
See also Bostock, 140 S. Ct. at 1778 (Alito, S., dissenting) 
(expressing the view that the decision ``is virtually certain to 
have far-reaching consequences'' including, specifically, with 
regard to ECOA).
    \23\ Bostock, 140 S. Ct. at 1734 (holding that under Title VII, 
``the plaintiff's sex need not be the sole or primary cause of the 
employer's adverse action'').
    \24\ See Official Staff Commentary, 12 CFR part 1002, supp. I, ] 
4(a)-1) (``Disparate treatment on a prohibited basis is illegal 
whether or not it results from a conscious intent to 
discriminate.''); Saldana v. Citibank, Fed. Sav. Bank, No. 93 C 
4164, 1996 WL 332451, at *2 (N.D. Ill. June 13, 1996) (``To 
establish a case of lending discrimination under the [Fair Housing 
Act] or the ECOA, [plaintiff] does not need to prove an actual 
intent to discriminate on the part of [defendant], but she must show 
that race played some role in [defendant's] decision.''). Moreover, 
the 1994 Interagency Policy Statement on Discrimination in Lending 
(Policy Statement) provides an illustration of disparate treatment 
where the applicants' minority status was not the sole or primary 
reason for the loan denial since adverse credit information was also 
a factor in the decision. The illustration states that a nonminority 
couple applied for an automobile loan. The lender found adverse 
information in the couple's credit report. The lender discussed the 
credit report with them and determined that the adverse information 
(a judgment against the couple) was incorrect since the judgment had 
been vacated. The nonminority couple was granted their loan. A 
minority couple applied for a similar loan with the same lender. 
Upon discovering adverse information in the minority couple's credit 
report, the lender denied the loan application on the basis of the 
adverse information without giving the couple an opportunity to 
discuss the report. 59 FR 18266, 18268 (Apr. 15, 1994); Bureau of 
Consumer Fin. Prot., Bulletin 2012-04 (Fair Lending) (Apr. 18, 
2012), https://files.consumerfinance.gov/f/201404_cfpb_bulletin_lending_discrimination.pdf (the Bureau 
expressed its concurrence with the Policy Statement).
    \25\ Bostock, 140 S. Ct. at 1734 (finding that ``an employer 
cannot escape liability [under Title VII] by demonstrating that it 
treats males and females comparably as groups'').
    \26\ While Title VII prohibits discrimination against ``any 
individual,'' 42 U.S.C. 2000e-2(a)(1), and ECOA prohibits 
discrimination against ``any applicant,'' 15 U.S.C. 1691(a), both 
statutes refer to a singular person or applicant rather than a 
group. ECOA defines an ``applicant'' as ``any person who applies to 
a creditor directly for an extension, renewal, or continuation of 
credit or applies to a creditor indirectly by use of an existing 
credit plan for an amount exceeding a previously established credit 
limit.'' 15 U.S.C. 1691a(b). Regulation B defines an ``applicant'' 
as ``any person who requests or who has received an extension of 
credit from a creditor, and includes any person who is or may become 
contractually liable regarding an extension of credit.'' 12 CFR 
1002.2(e).
    \27\ 12 CFR part 1002, supp. I, ] 2(z)-1 (providing that 
``prohibited basis refers not only to characteristics--the race, 
color, religion, national origin, sex, marital status, or age--of an 
applicant (or officers of an applicant in the case of a corporation) 
but also to the characteristics of individuals with whom an 
applicant is affiliated or with whom the applicant associates'').
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    The Bureau believes that even though the term ``sex'' is not 
defined in ECOA or Regulation B, the prohibitions against 
discrimination on the basis of ``sex'' under ECOA and Regulation B are 
correctly interpreted to include discrimination based on sexual 
orientation and/or gender identity. As explained below and consistent 
with the Court's analysis in the Bostock opinion, this conclusion can 
be based on ``no more than the straightforward application of legal 
terms with plain and settled meanings.'' \28\ But, even if it were not 
so straightforward, the Bureau would still reach the same conclusion 
based on its expertise in interpreting ECOA and Regulation B. In sum, 
the Bureau finds that under ECOA and Regulation B: (1) Sexual 
orientation discrimination and gender identity discrimination 
necessarily involve consideration of sex; (2) an applicant's sex must 
be a ``but for'' cause of the injury, but need not be the only cause; 
and (3) discrimination against individuals, and not merely against 
groups, is covered. The Bureau also clarifies that ECOA's and 
Regulation B's prohibition against sex discrimination encompasses 
discrimination motivated by perceived nonconformity with sex-based or 
gender-based stereotypes, as well as discrimination based on an 
applicant's associations.
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    \28\ Bostock, 140 S. Ct. at 1743.
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    First, under ECOA and Regulation B, as under Title VII, sexual 
orientation discrimination and gender identity discrimination 
necessarily involve consideration of sex. For example, if a creditor 
declines the loan application of a male applicant on the basis that he 
is attracted to men, the creditor discriminates against him for traits 
or actions it tolerates in female applicants; further, this 
discrimination is motivated, at least partly, by the applicant 
``failing to fulfill traditional sex stereotypes.'' \29\ Or, if a 
creditor declines the loan forbearance application of a transgender 
person who was identified as male at birth but who now identifies as 
female, but approves the application of an otherwise similarly-situated 
applicant who was identified as female at birth and now continues to 
identify as female, the creditor discriminates against a person 
identified as male at birth for traits or actions that it tolerates in 
an applicant identified as female at birth. In these examples, the 
individual applicant's ``sex plays an unmistakable and impermissible 
role'' \30\ in the credit decisions and thus constitutes discrimination 
on the basis of sex in violation of ECOA and Regulation B. The Bureau's 
interpretation is consistent with the Supreme Court's conclusion in 
Bostock that ``it is impossible to discriminate against a person for 
being homosexual or transgender without discriminating against that 
individual based on sex.'' \31\
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    \29\ Id. at 1742.
    \30\ Id. at 1741-42.
    \31\ Id. at 1741. Notwithstanding differences in the ways that 
Title VII and ECOA phrase their prohibition against sex 
discrimination, the Bureau interprets ECOA and Regulation B to 
incorporate the Bostock principles and reasoning with respect to the 
recognition of sexual orientation discrimination and gender identity 
discrimination as sex discrimination under ECOA and Regulation B.
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    Second, under ECOA and Regulation B, as under Title VII, sex does 
not have to be the sole or primary reason for an action to be 
discriminatory.\32\ For example, when a creditor rejects an applicant 
on the basis of their being gay or transgender, two causal factors may 
be in play--both the individual's sex and something else (the sex to 
which the individual is attracted or with which the individual 
identifies).\33\ Under ECOA and Regulation B, if a creditor would not 
have rejected a credit applicant or discouraged a prospective applicant 
but for that individual's sex, the causation standards are met, and 
liability may attach.\34\
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    \32\ See id. at 1744; 59 FR 18266, 18268 (Apr. 15, 1994).
    \33\ See id. at 1742.
    \34\ See id. at 1742; see also Rosa, 214 F.3d at 215.
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    Third, ECOA and Regulation B, like Title VII, apply to sex 
discrimination against individuals, not just to situations where all 
men or all women are discriminated against categorically.\35\ Further, 
ECOA and Regulation B, like Title VII, work to protect individuals of 
all sexes from discrimination, and do so equally.\36\ For example, a 
creditor who rejects an application from a woman because the loan 
officer regards her as insufficiently feminine, and also rejects an 
application from a man because the loan officer regards him as being 
insufficiently masculine, may treat men and women as groups more or 
less equally. But in both scenarios, the creditor has discriminated 
against an applicant in violation of ECOA and Regulation B by rejecting 
an individual applicant in part because of sex. Instead of avoiding 
ECOA exposure, this creditor ``doubles it.'' \37\ It is no defense for 
a creditor to argue that it is equally happy to reject male and female 
applicants who are gay or transgender because each instance of 
discriminating against an individual applicant because of that 
individual's sex is an independent violation of ECOA and Regulation 
B.\38\
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    \35\ See Bostock, 140 S. Ct. at 1740-41; see also Rosa, 214 F.3d 
at 215 (finding a potential ECOA claim where the plaintiff ``did not 
receive the loan application because he was a man, whereas a 
similarly situated woman would have received the loan 
application'').
    \36\ See Bostock, 140 S. Ct. at 1741.
    \37\ See id. at 1741.
    \38\ See id. at 1742-43.
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    Last, the Bureau interprets the ECOA and Regulation B prohibition 
against discrimination on the basis of ``sex'' to also include 
discrimination motivated by perceived nonconformity with sex-based or 
gender-based stereotypes, including those related to gender identity 
and/or sexual orientation, as well as discrimination based on an 
applicant's associations. An example of discriminatory sex-based or 
gender-based stereotyping occurs if a small business lender discourages 
a small business owner appearing at its office from applying for a 
business loan and tells the prospective applicant to go home and change 
because, in the view of the creditor, the small business customer's 
attire does not accord with the customer's gender.\39\ The Bureau's 
interpretation regarding discriminatory stereotyping is consistent with 
multiple court decisions \40\ and with the Court's Bostock 
decision.\41\ The Bureau's

[[Page 14366]]

interpretation regarding associational discrimination is similarly 
consistent with the Court's reasoning in Bostock regarding how 
discrimination based on the sex, including sexual orientation and/or 
gender identity, of the persons with whom the individual associates is 
prohibited under Title VII.\42\ A creditor engages in such 
associational discrimination if it, for example, requires a person 
applying for credit who is married to a person of the same-sex to 
provide different documentation of the marriage than a person applying 
for credit who is married to a person of the opposite sex. The Bureau's 
interpretation is consistent with the principle, applied by Federal 
agencies for decades, that credit discrimination on a prohibited basis 
includes discrimination against an applicant because of the protected 
characteristics of individuals with whom they are affiliated or 
associated (e.g., spouses, domestic partners, dates, friends, 
coworkers).\43\ Moreover, the Bureau has previously established that a 
creditor may not discriminate against an applicant because of that 
person's personal or business dealings with members of a protected 
class, because of the protected class of any persons associated with 
the extension of credit, or because of the protected class of other 
residents in the neighborhood where the property offered as collateral 
is located.\44\
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    \39\ See, e.g., Rosa, 214 F.3d at 214-15.
    \40\ See EEOC v. Boh Bros. Constr. Co., 731 F.3d 444, 457-58 
(5th Cir. 2013) (en banc); Glenn v. Brumby, 663 F.3d 1312, 1314, 
1320-21 (11th Cir. 2011); Barnes v. City of Cincinnati, 401 F.3d 
729, 735-37 (6th Cir. 2005); Nichols v. Azteca Rest. Enterprises, 
Inc., 256 F.3d 864, 870, 874-75 (9th Cir. 2001); Rosa, 214 F.3d at 
215.
    \41\ See Bostock, 140 S. Ct. at 1742-43 (stating that an 
employer who fires employees ``for failing to fulfill traditional 
sex stereotypes doubles rather than eliminates Title VII liability, 
an employer who fires [employees] for being gay or transgender does 
the same'').
    \42\ See id. at 1748 (``So, for example, when it comes to 
homosexual employees, male sex and attraction to men are but-for 
factors that can combine to get them fired. The fact that female sex 
and attraction to women can also get an employee fired does no more 
than show the same outcome can be achieved through the combination 
of different factors. In either case, though, sex plays an essential 
but-for role.'').
    \43\ See Equal Credit Opportunity; Revision of Regulation B; 
Official Staff Commentary, 50 FR 48018, 48049 (Nov. 20, 1985) 
(providing that discrimination on a ``prohibited basis refers not 
only to characteristics--the race, color, religion, national origin, 
sex, marital status, or age--of an applicant (or officers of an 
applicant in the case of a corporation) but also to the 
characteristics of individuals with whom an applicant is affiliated 
or with whom the applicant associates,'' or because of the 
characteristics of people with whom an applicant has ``personal or 
business dealings''); 59 FR 18266, 18268 (Apr. 15, 1994) (stating 
that ``A lender may not discriminate on a prohibited basis because 
of the characteristics of: [a] person associated with a credit 
applicant (for example, a co-applicant, spouse, business partner, or 
live-in-aide); or [t]he present or prospective occupants of the area 
where property to be financed is located.''); 76 FR 79442, 79473 
(Dec. 21, 2011); 81 FR 25323, 25325 (Apr. 28, 2016); Official Staff 
Commentary, 12 CFR part 1002, supp. I, ] 2(z)-1).
    \44\ Official Staff Commentary, 12 CFR part 1002, supp. I, ] 
2(z)-1).
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    For these reasons, the ECOA and Regulation B prohibition against 
discrimination on the basis of ``sex'' includes discrimination or 
discouragement based on sexual orientation and/or gender identity, 
including but not limited to discrimination based on actual or 
perceived nonconformity with sex-based or gender-based stereotypes and 
discrimination based on an applicant's associations.

III. Legal Authority

    This interpretive rule is issued under the Bureau's authority to 
interpret the ECOA and Regulation B, including under section 1022(b)(1) 
of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which 
authorized guidance as may be necessary or appropriate to enable the 
Bureau to administer and carry out the purposes and objectives of 
Federal consumer financial laws.\45\
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    \45\ 12 U.S.C. 5512(b)(1). The relevant provisions of the ECOA 
and Regulation B form part of Federal consumer financial law. 12 
U.S.C. 5481(12)(D), (14).
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    By operation of the ECOA section 706(e), no provision of ECOA 
sections 701(a), 704(b), 706(a), or 706(b) imposing any liability 
applies to any act done or omitted in good faith in conformity with 
this interpretive rule, notwithstanding that after such act or omission 
has occurred, the rule is amended, rescinded, or determined by judicial 
or other authority to be invalid for any reason.\46\
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    \46\ 15 U.S.C. 1691(e).
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IV. Effective Date

    Because this rule is solely interpretive, it is not subject to the 
30-day delayed effective date for substantive rules under section 
553(d) of the Administrative Procedure Act.\47\ Therefore, this rule is 
effective on March 16, 2021, the same date that it is published in the 
Federal Register.
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    \47\ 75 U.S.C. 553(d).
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V. Regulatory Matters

    As an interpretive rule, this rule is exempt from the notice-and-
comment rulemaking requirements of the Administrative Procedure 
Act.\48\ Because no notice of proposed rulemaking is required, the 
Regulatory Flexibility Act does not require an initial or final 
regulatory flexibility analysis.\49\ The Bureau also has determined 
that this interpretive rule does not impose any new or revise any 
existing recordkeeping, reporting, or disclosure requirements on 
covered entities or members of the public that would be collections of 
information requiring approval by the Office of Management and Budget 
under the Paperwork Reduction Act.\50\
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    \48\ 5 U.S.C. 553(b).
    \49\ 5 U.S.C. 603(a), 604(a).
    \50\ 44 U.S.C. 3501-3521.
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    Pursuant to the Congressional Review Act,\51\ the Bureau will 
submit a report containing this interpretive rule and other required 
information to the U.S. Senate, the U.S. House of Representatives, and 
the Comptroller General of the United States prior to the rule's 
published effective date. The Office of Information and Regulatory 
Affairs has designated this interpretive rule as not a ``major rule'' 
as defined by 5 U.S.C. 804(2).
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    \51\ 5 U.S.C. 801 et seq.

    Dated: March 5, 2021.
David Uejio,
Acting Director, Bureau of Consumer Financial Protection.
[FR Doc. 2021-05233 Filed 3-15-21; 8:45 am]
BILLING CODE 4810-AM-P