The Consumer Finance Protection Bureau has stated that discrimination by creditors based on gender identity or sexual orientation violates the Equal Credit Opportunity Act. As Slate online magazine put it, when providing the first widespread coverage of this issue in an article published last week,“[t]he federal government just accomplished a decades long goal of LGBTQ advocates with a single letter.” The letter referred to was actually sent on August 30, 2016, from the CFPB to Services and Advocacy for GLBT Elders (“SAGE”), a national social service and advocacy organization for gay, lesbian, bisexual, and transgender elders.

SAGE had requested the CFPB to provide its views on whether ECOA prohibited discrimination based on gender identity and sexual orientation. The CFPB 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,” based on a number of factors that the letter thoroughly analyzes.

The CFPB’s letter provides a detailed analysis of various judicial and administrative decisions supporting its conclusion. It provides an extensive discussion of federal employment anti-discrimination protections being extended to LGBTQ persons, and notes long-standing precedent from the First Circuit holding that discriminating against a biological male who does not wear traditional male attire violated ECOA itself. See Rosa v. Park W. Bank & Trust Co., 214 F.3d 213 (1st Cir. 2000). The overall point is simple: discrimination against people who do not conform with sex-based and gender-based stereotypes constitutes discrimination based on sex and gender, and is therefore illegal.

The CFPB concludes by soliciting leads on creditors who “treat applicants less favorably because of gender identity or sexual orientation” or “impose obstacles on transgender applicants who may submit applications designating their sex consistent with their gender identity.” This may indicate that such discrimination may not be pervasive, which is consistent with our impression of our firm clients. Nevertheless, creditors should ensure compliance and reduce risk by formalizing official policies against gender-based and sexual orientation-based discrimination and by training their personnel accordingly.