The Consumer Financial Protection Bureau (CFPB) on Wednesday (March 16) updated its supervisory operations to “better protect families and communities from illegal discrimination, including in situations where fair lending laws may not apply,” according to a bureau press release.
The CFPB “will scrutinize discriminatory conduct that violates the federal prohibition against unfair practices” at banks and companies across the U.S. The CFPB “will closely examine financial institutions’ decision-making in advertising, pricing, and other areas to ensure that companies are appropriately testing for and eliminating illegal discrimination,” the press release says.
“When a person is denied access to a bank account because of their religion or race, this is unambiguously unfair,” said CFPB Director Rohit Chopra in the announcement. “We will be expanding our anti-discrimination efforts to combat discriminatory practices across the board in consumer finance.”
The CFPB also published an updated exam manual today for evaluating unfair, deceptive and abusive acts and practices (UDAAPs) which notes that “discrimination may meet the criteria for ‘unfairness’ by causing substantial harm to consumers that they cannot reasonably avoid, where that harm is not outweighed by countervailing benefits to consumers or competition,” the release says.
“Consumers can be harmed by discrimination regardless of whether it is intentional,” according to the press release. The CFPB “will examine for discrimination in all consumer finance markets, including credit, servicing, collections, consumer reporting, payments, remittances, and deposits,” it says.
Related: FTC’s Complaint Against Payment Firm May Be Blueprint for CFPB
On Tuesday (March 15), the Federal Trade Commission (FTC) filed an administrative complaint against Electronic Payment Systems for allegedly opening credit card processing merchant accounts for fictitious companies on behalf of a scammer, Money Now Funding, perhaps creating a template for the CFPB.
The complaint alleges that Electronic Payment Systems facilitated the scammers’ evasion by creating 43 different merchant accounts for fictitious companies on behalf of Money Now Funding, allowing the scammers to run more than $4.6 million in consumer credit card charges through those accounts.
Electronic Payment Systems submitted a consent agreement in January to settle the matter, which the FTC has accepted, though it is still open to public comments. After the 30-day deadline for comments, the FTC will decide whether to make the proposed consent order final.
