On October 12, 2023, the CFPB and the DOJ issued a joint statement that reminds financial institutions that all credit applicants are protected from discrimination on the basis of their national origin, race, and other characteristics covered by the Equal Credit Opportunity Act, regardless of their immigration status. The joint statement was issued in light of consumers’ reports on being rejected for credit cards as well as for auto, student, personal, and equipment loans because of their immigration status, even when they have strong credit histories and ties to the United States and are otherwise qualified to receive the loans.
From DOJ’s Assistant Attorney General Kristen Clarke statement:
“Lenders should not deny people the opportunity to take out a loan to buy a home, build their businesses or otherwise pursue their financial goals because of unlawful bias and without regard to their actual ability to repay. This guidance reminds lenders that denying someone access to credit based solely on their actual or perceived immigrant status may violate federal law.”
According to the CFPB, some financial institutions have denied credit to individuals based on their immigration status, regardless of their personal circumstances and ability to repay, arguing that the Equal Credit Opportunity Act protects them whenever they make credit decisions based on immigration status. Some have incorrectly claimed that the Act shields lenders from liability under other federal and state civil rights laws banning discrimination based on a person's immigration status.
The joint statement explains that while the Equal Credit Opportunity Act allows creditors to consider immigration status when necessary to ascertain the creditor’s rights regarding repayment, unnecessary or overbroad reliance on immigration status may violate the Act’s prohibition of discrimination on the basis of national origin, race or another prohibited basis. The joint statement also confirms that neither the Equal Credit Opportunity Act nor its regulations provide companies a safe harbor with respect to other laws barring discrimination on the basis of immigration status.
Read the CFPB’s press release here.
The joint statement can be found here.