FTC Issues Annual Report on Its ECOA Enforcement and Policy Development Activity

The FTC—which has authority to enforce the Equal Credit Opportunity Act (ECOA) against most types of non-depository financial services providers—issued a report describing its enforcement actions and related activity under ECOA during 2023.

ECOA prevents discrimination based on various protected characteristics in connection with credit transactions.  Among other things, the FTC:

• Brought enforcement actions against auto lenders for discrimination against minority borrowers by charging them higher costs and fees and signing them up for unwanted add-on products;

• Conducted research and issued a report regarding discrimination against American Indian and Alaska Native borrowers in connection with consumer financial transactions;

• Issued guidance, in conjunction with several other agencies, regarding the application of existing fair lending laws to prevent discrimination or bias in the use of “artificial intelligence” or similar types of automated decision-making systems as part of the lending process;

• Participated in the Interagency Task Force on Fair Lending, which supports information sharing and joint policymaking by various government agencies on fair lending issues;

• Filed an amicus brief in support of the CFPB’s legal theory of “modern” redlining under ECOA in the CFPB’s appeal of an adverse district court decision in the CFPB v. Townstone Financial case; and,

• Provided fair lending education to consumers, and fair lending compliance guidance and notices to lenders.