The Equal Credit Opportunity Act (2024)

The Equal Credit Opportunity Act [ECOA], 15 U.S.C. 1691 et seq. prohibits creditors from discriminating against credit applicants on the basis of race, color, religion, national origin, sex, marital status, age, because an applicant receives income from a public assistance program, or because an applicant has in good faith exercised any right under the Consumer Credit Protection Act.

The Department of Justice may file a lawsuit under ECOA where there is a pattern or practice of discrimination. In cases involving discrimination in home mortgage loans or home improvement loans, the Department may file suit under both the Fair Housing Act and ECOA. Individuals who believe that they have been the victims of any unfair credit transaction involving residential property may file a complaint with the Department of Housing and Urban Development [HUD] or may file their own lawsuit.

Other federal agencies have general regulatory authority over certain types of lenders and they monitor creditors for their compliance with ECOA. ECOA requires these agencies to refer matters to the Justice Department when there is reason to believe that a creditor is engaged in a pattern or practice of discrimination which violates ECOA. In 1996, upon the recommendation of the General Accounting Office, the Department of Justice provided guidance to the federal bank regulatory agencies on pattern or practice referrals. That guidance described the factors that the Department would consider in determining which matters it would return to the agency for administrative resolution and which it would pursue for potential litigation.

Each year, the Department files a report with Congress on its activities under the statute. Read the Justice Department's 2022 Annual Report to Congress.

The Consumer Financial Protection Bureau has issued regulations under ECOA. These regulations, known as Regulation B, provide the substantive and procedural framework for fair lending.

Because the Department's authority to prosecute matters extends only to those instances of a pattern or practice of discrimination on a prohibited basis, individuals who believe that they are the victims of unfair discrimination in a credit transaction should contact the appropriate regulatory agency. The agencies and the types of creditors that they regulate for purposes of compliance with ECOA are as follows:

Consumer Financial Protection Bureau [CFPB]: Banks, savings associations, and credit unions with total assets of over $10 billion and their affiliates. Also shares enforcement authority with the Federal Trade Commission over mortgage brokers, mortgage originators, mortgage servicers, lenders offering private educational loans, and payday lenders regardless of size.

Comptroller of Currency [OCC]: National banks, Federal savings associations and Federal branches/agencies of foreign banks with total assets of under $10 billion (the words "National" or "Federal" or the initials "N.A." or "F.S.B." appear in or after the bank's name).

Federal Reserve Board [FRB]: Financial institutions with total assets of under $10 billion that are members of the Federal Reserve System, except national banks and federal branches/agencies of foreign banks.

Federal Deposit Insurance Corporation [FDIC]: State chartered banks with total assets of under $10 billion that are not members of the Federal Reserve System.

National Credit Union Association [NCUA]: Federal credit unions (the words "Federal credit union" appear in the institution's name).

Federal Trade Commission [FTC]: Retailers, finance companies, creditors that are not exclusively assigned to another agency.

Updated January 25, 2024

The Equal Credit Opportunity Act (2024)


What does the Equal Credit Opportunity Act do? ›

The Federal Equal Credit Opportunity Act prohibits creditors from discriminating against credit applicants on the basis of race, color, religion, national origin, sex, marital status, age (provided the applicant has the capacity to enter into a binding contract); because all or part of the applicant's income derives ...

What is the purpose of the Equal Credit Opportunity Act Quizlet? ›

What is the purpose of ECOA? to promote the availability of consumer credit to all applicants by prohibiting credit decision based on race, color, religion, national origin, gender, marital status, or age.

What is a red flag for an Equal Credit Opportunity Act violation? ›

Look for red flags, such as: Treated differently in person than on the phone or online. Discouraged from applying for credit. Encouraged or told to apply for a type of loan that has less favorable terms (for example, a higher interest rate)

What is an example of an ECOA violation? ›

Altering an applicant's interest rate, credit limit, or credit terms due to their protected status. Requiring loan applicants to provide protected information, such as race, ethnicity, marital status, or other social information, to process their loan application.

Can you sue for being denied credit? ›

Check the site of your state attorney general's office for information about the state's equal credit opportunity laws. You may be able to see if the creditor violated state laws. Consider suing the creditor in federal district court. If you win, you can recover your actual damages.

Why was the Equal Credit Opportunity Act passed? ›

ECOA was implemented to prevent creditors from engaging in any sort of discriminatory practices when reviewing credit applications. Under ECOA, consumers cannot be denied credit based on sex, race, marital status, religion, national origin, age or receipt of public assistance.

What does the Equal Credit Opportunity Act prevent? ›

ECOA is an important federal law promoting fair lending practices. It bars lender discrimination, and guards against bias related to race, religion, national origin, gender, marital status, age, public assistance eligibility, or consumer protection rights.

What is the main aim of equal opportunity? ›

Equal opportunity law aims to promote everyone's right to equal opportunities, eliminate, as far as possible, discrimination, sexual harassment and victimisation and provide redress for people whose rights have been breached.

What is the purpose of the Equal credit Opportunity and Fair Housing Act? ›

The Fair Housing Act (FHA) and the Equal Credit Opportunity Act (ECOA) protect consumers by prohibiting unfair and discriminatory practices.

Who enforces the Equal Credit Opportunity Act? ›

The CFPB shares the job of supervising for compliance with ECOA with other federal agencies, including the Office of the Comptroller of the Currency , Federal Reserve Board , Federal Deposit Insurance Corporation , and National Credit Union Administration .

What happens if you violate the Equal Credit Opportunity Act? ›

If a lender is guilty of violating the ECOA, it can be sued in court for actual damages, punitive damages of up to $10,000 for individual lawsuits and $500,000 or 1% of the creditor's net worth for class-action lawsuits.

What are the three types of discrimination under ECOA? ›

Types of Lending Discrimination

The courts have recognized three methods of proof of lending discrimination under the ECOA and the FHAct: Overt evidence of disparate treatment; • Comparative evidence of disparate treatment; and • Evidence of disparate impact.

What can result from failure to comply with ECOA? ›

Creditors that fail to comply with Reg B will be held liable for punitive damages up to $10,000 in individual actions. For class actions, the creditor could face a penalty of $500,000 or 1% of the creditor's net worth, whichever is lower.

What is a disparate impact under ECOA? ›

A disparate impact occurs when a lender applies a racially (or otherwise) neutral policy or practice Page 3 Federal Fair Lending Regulations and Statutes: Overview equally to all credit applicants but the policy or practice disproportionately excludes or burdens certain persons on a prohibited basis.

What is considered an application under ECOA? ›

(f) Application means an oral or written request for an extension of credit that is made in accordance with procedures used by a creditor for the type of credit requested.

What does the Equal Credit Opportunity Act prevent Quizlet? ›

Makes it unlawful for any creditor to discriminate against any applicant, based on race, color, religion, national origin, sex, marital status, or age; OR that their income is generated from public assistance programs.

What does ECOA mean on a credit report? ›

The Equal Credit Opportunity Act (ECOA), otherwise known as "Regulation B," was enacted in 1974 and falls under the larger Consumer Credit Protection Act. It exists to help individuals from being denied from accessing credit based on discriminatory factors.


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