11/23/2023 0 Comments Cfpb ecoaThe exam manual update also announced the CFPB’s intent to examine decision-making in “advertising, pricing, and other areas” to ensure that consumer-facing companies are “testing for and eliminating unfair and illegal discrimination.” Under this new definition, discriminatory practices may meet the criteria for “unfairness” even if they do not involve “credit” as required by the ECOA.įor example, if a customer is denied access to a product or is harassed in a discriminatory manner by a debt collector, the financial company involved may have violated the prohibition against UDAAP. In March 2022, the CFPB announced that it had updated its exam manual to address discriminatory practices by expanding the definition of unfair, deceptive, or abusive acts and practices, or UDAAP, under the Dodd-Frank Act. In the last year, the CFPB took significant steps toward a broader consumer protection approach to fair lending and potential discrimination, following a decade of traditional fair lending examinations pursuant to the Equal Credit Opportunity Act. The CFPB’s consumer protection mission has focused on the same communities targeted by ESG efforts since its inception. Defining Discrimination in Financial Services Recent announcements from this consumer protection watchdog highlight the need to develop appropriate policies and procedures to avoid regulatory action. These financial inclusion efforts dovetail with corporate environmental, social, and governance, which continues to grow in importance.ĭespite their laudable goals, however, these fintech companies may be subject to even greater regulatory risks, particularly from the Consumer Financial Protection Bureau. Banks may even partner with fintech companies to help reach new customers within such communities. Many fintech companies tout their ability to use non-traditional tools to promote financial access for underserved and unbanked communities.
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