CFPB Sues Comerica Bank for Systematically Failing Disabled and Older Americans

The Consumer Financial Protection Bureau (CFPB) has sued Comerica Bank for systematically failing its 3.4 million Direct Express cardholders - disabled and older Americans who receive Social Security and other federal benefits. The bank deliberately disconnected 24 million customer service calls, impeding cardholders from exercising their rights under the law, charged illegal ATM fees to over 1 million cardholders, and mishandled fraud complaints while providing federal benefits through the Direct Express prepaid debit card program. The CFPB is asking the court to order Comerica to stop these practices, provide refunds to affected customers, and pay civil penalties to the CFPB's victim relief fund.

Comerica Bank is a subsidiary of Comerica Inc. (NYSE: CMA), among the 25 largest bank holding companies in the U.S. Incorporated in Delaware, it is headquartered in Texas. Comerica reported total assets of more than $84 billion and total deposits of over $71 billion. Since 2008, the U.S. Department of Treasury has contracted with Comerica Bank to administer the Direct Express program, in which 3.4 million federal beneficiaries receive their monthly benefits payments through prepaid debit cards. Direct Express is a prepaid card that beneficiaries can use to pay for groceries, gas, and other expenses.  

Comerica is in charge of customer service for the millions of Americans using Direct Express, many of whom are unbanked. Rather than ensuring that there was sufficient customer service to handle calls from the benefits recipients, Comerica instead boosted its bottom line. When people had problems with their accounts, it was often impossible to talk to someone for help. 

The CFPB’s investigation found that Comerica failed to ensure sufficient staff and even intentionally disconnected more than 24 million calls. The CFPB alleges that Comerica harmed its customers by:

• Deliberately disconnecting customer service calls: Comerica’s vendors intentionally dropped over 24 million calls from customers before they could reach a representative. Customers whose calls were not dropped were routinely forced to endure excessively long wait times - often more than several hours - to speak with a representative to get help with unauthorized transactions, charge disputes, and lost or stolen cards.
• Charging consumers illegal ATM fees: Over one million Direct Express cardholders were charged ATM fees to access their government benefits in situations where they were legally entitled to free withdrawals.
• Misleading fraud victims: When consumers contacted Comerica alleging they had been fraudulently enrolled into the Direct Express program, the bank’s vendors frequently advised the consumers that “no error occurred” although the bank had determined that there was, in fact, enrollment fraud.
• Imposing illegal terms of service on consumers seeking to stop payments: Comerica led its consumers to agree to waive their consumer protections by requiring cardholders to contact and request merchants to stop pre-authorized payment transfers from their account in situations where the law in fact required the bank to stop the transfers itself.
• Failing to investigate account problems: Under federal law, when a customer notifies a bank about an incorrect or potentially fraudulent charge on their account, the bank must take steps to investigate the error within a specified time period. The CFPB’s investigation found that Comerica failed to meet this requirement more than 20,000 times. When they did investigate, they frequently provided vague and confusing findings or blew off customers altogether.
• Forcing consumers to close accounts, which often resulted in additional fees: The bank’s vendors required thousands of cardholders to close their accounts to stop a preauthorized payment, resulting in consumers incurring additional fees to expedite receipt of their new debit cards to regain access to their government benefits.

Under the Consumer Financial Protection Act, the CFPB has the authority to take action against institutions violating consumer financial protection laws, including engaging in unfair, deceptive, or abusive acts and practices. The CFPB’s lawsuit seeks to stop Comerica’s unlawful conduct, to provide redress for harmed borrowers, and the imposition of a civil money penalty, which would be paid into the CFPB’s victims relief fund. Read today’s complaint.

Consumers can submit complaints about financial products and services by visiting the CFPB’s website or by calling (855) 411-CFPB (2372).

Employees who believe their company has violated federal consumer financial protection laws are encouraged to send information about what they know to whistleblower@cfpb.gov. To learn more about reporting potential industry misconduct, visit the CFPB’s website.

The Consumer Financial Protection Bureau is a 21st century agency that implements and enforces Federal consumer financial law and ensures that markets for consumer financial products are fair, transparent, and competitive. For more information, visit www.consumerfinance.gov.

Read the December 6, 2024 CFPB article.

CFPB Files Order to Stop Townstone Financial’s Unlawful Redlining

The Consumer Financial Protection Bureau (CFPB) has filed a proposed order to resolve its case against Townstone Financial for discriminatory lending practices and redlining African American neighborhoods in Chicago. If entered by the court, the proposed order would prohibit Townstone from taking any actions that violate the Equal Credit Opportunity Act (ECOA) and require it to pay a $105,000 penalty to the CFPB’s victims relief fund. The action follows lengthy contested litigation and a unanimous July 2024 decision from the U.S. Court of Appeals for the Seventh Circuit that the ECOA prohibits lenders from discouraging prospective applicants on a prohibited basis from applying for loans.

Townstone was a nonbank retail-mortgage creditor and broker based in Chicago through 2018. Some 90% of Townstone’s mortgage lending was in the Chicago metro. From 2014-2017, Townstone was in the top 10% of lenders in applications from the Chicago metro, receiving an average of 740 mortgage loan applications annually. Townstone ended mortgage lending in 2018 during the CFPB’s investigation, and is now solely a mortgage broker. 

In 2020, the CFPB sued Townstone for discouraging potential applicants because of their race or the racial composition of where they lived or sought to live. Townstone’s advertising, marketing, and business practices discouraged African Americans from applying for credit and actively avoided the credit needs of African American applicants and African American neighborhoods in the Chicago metro.

Townstone drew only five or six applications a year for properties in neighborhoods that were more than 80% African American, despite those neighborhoods being nearly 14% of census tracts in the Chicago metro, and over half of the applications it did draw were from white applicants. From 2014-2017, barely 2% of Townstone’s mortgage-loan applications were for properties in majority African American neighborhoods, even though they make up nearly 19% of the Chicago metro’s census tracts.

Under the Consumer Financial Protection Act, the CFPB has the authority to take action against institutions violating consumer-financial protection laws, including the Equal Credit Opportunity Act and the Consumer Financial Protection Act. If entered by the court, the proposed order would require Townstone to pay a $105,000 penalty, which will be deposited into the CFPB’s victims relief fund. If Townstone violates the ECOA again, it could find itself in contempt of the court order and face further sanctions.

Read the proposed order.

Read the November 1, 2024 CFPB press release.

CFPB and Justice Department Charge Fairway for Redlining Black Neighborhoods in Birmingham, Alabama

The Consumer Financial Protection Bureau (CFPB) and the U.S. Department of Justice (DOJ) took action to end Fairway Independent Mortgage Corporation’s illegal mortgage lending discrimination against majority-Black neighborhoods in the greater Birmingham, Alabama area. The CFPB and DOJ allege that Fairway illegally redlined Black neighborhoods, including through its marketing and sales actions. Fairway’s actions discouraged people from applying for mortgage loans in the Birmingham metropolitan area’s Black neighborhoods. If entered by the court, the settlement would require Fairway to pay a $1.9 million civil penalty to the CFPB’s victims relief fund. Fairway would also be required to provide $7 million for a loan subsidy program to offer affordable home purchase, refinance, and home improvement loans in majority-Black neighborhoods. Redlining is the illegal practice of denying the same access to credit to certain neighborhoods based on the racial or ethnic composition of those areas. 

Fairway is a non-depository mortgage company based in Madison, Wisconsin, and operates in the Birmingham area under the trade name MortgageBanc. In 2023, Fairway was the third largest mortgage lender, receiving over 100,000 applications and originating over $24 billion in loans. In this closely held company, Steve Jacobson is the majority owner.

The complaint describes how Fairway redlined majority-Black neighborhoods in the Birmingham Metropolitan Statistical Area (Birmingham MSA). During the period covered by the complaint, the Birmingham MSA included six counties in north central Alabama with a population of about 1.1 million. While Fairway claimed to serve the entire metropolitan area, it concentrated all its retail loan offices in majority-white areas, directed less than 3% of its direct mail advertising to consumers in majority-Black areas during 2018-2020, and discouraged homeownership in majority-Black areas by generating loan applications at a rate far below its peer institutions.

The CFPB and DOJ allege that Fairway violated the Equal Credit Opportunity Act, the Consumer Financial Protection Act, and the Fair Housing Act. Specifically, the government alleges problematic conduct by Fairway including:

• Failing to address known signs of discrimination: Fairway's own data showed that it was failing to serve majority-Black neighborhoods in the Birmingham area. Before October 2022, it took no steps to address redlining risk other than telling loan officers not to discriminate. Only 3.7% of Fairway’s applications during 2018-2022 were for properties in majority-Black areas, compared to 12.2% for similar lenders. This disparity was higher in neighborhoods with 80% or more Black residents, where it made loans at less than 1/8 the rate of its peer lenders. Fairway did not adopt any written plan for marketing or growth to address the concern.

• Redlining Black neighborhoods: From 2015 through 2022, Fairway operated three retail loan offices and three loan production desks in real estate offices in the Birmingham metropolitan area, all in majority-white areas. Fairway also relied on referrals from real estate professionals and others to generate applications, and the vast majority of Fairway’s referral sources and referred consumers were located in majority-white areas. Fairway predominantly directed its marketing to majority-white areas. By doing this, Fairway unlawfully discouraged mortgage loan applications for properties in majority-Black neighborhoods.

Under the Consumer Financial Protection Act of 2010 (CFPA), the CFPB has the authority to take enforcement action against institutions that violate federal consumer financial protection laws, including violations of the Equal Credit Opportunity Act and its implementing regulation, Regulation B. The DOJ agreed with CFPB’s claim that Fairway violated the Equal Credit Opportunity Act and its implementing regulation, and separately alleges that Fairway violated the Fair Housing Act.

The proposed order filed by CFPB and DOJ would require Fairway to:

• Pay a $1.9 million penalty: The penalty against Fairway would be paid into the CFPB’s Civil Penalty Fund, also referred to as the victims relief fund.
• Provide $7 million for a loan subsidy program: The order would require Fairway to offer home purchase, refinance, and home improvement loans on a more affordable basis than otherwise available in majority-Black neighborhoods in the Birmingham metropolitan area.
• Pay at least $1 million to serve neighborhoods it redlined to address some of the gap in credit access caused by its discriminatory activities. Fairway would be required to open or acquire a new loan production office or full-service retail office in a majority-Black neighborhood in the Birmingham metropolitan area, and will pay (2) at least $500,000 for advertising and outreach, (3) at least $250,000 on consumer financial education, and (4) at least $250,000 on partnerships with community-based or governmental organizations to serve neighborhoods previously redlined by the company.

Read the proposed order.

Consumers can submit complaints about financial products and services by visiting the CFPB’s website or by calling (855) 411-CFPB (2372).

Employees who believe their company has violated federal consumer financial protection laws are encouraged to send information about what they know to whistleblower@cfpb.gov. To learn more about reporting potential industry misconduct, visit the CFPB’s website.

NCRC and Fintechs Urge Federal Regulators to Use AI to Detect and Eliminate Lending Discrimination

 

The National Community Reinvestment Coalition (NCRC) and a group of financial technology firms submitted a joint letter urging regulators issue clear guidelines to lenders on how the new AI fair lending tools could better evaluate disparities in lending. The letter to the Consumer Financial Protection Bureau (CFPB) and Federal Housing Finance Agency (FHFA) - signed by NCRC, Zest AI, Upstart, Stratyfy, and FairPlay - was issued in response to the White House’s Executive Order on AI in October, 2023.

Some lenders have not adopted these newer tools for underwriting analysis because they believe they can remain compliant with existing fair lending laws despite evidence that suggests older scoring models continue to contribute to systemic discrimination. Newer fair lending tools can allow lenders to conduct searches for new underwriting models that perform as well as older scoring models, while also mitigating the risk of discrimination in their analysis of an LMI credit applicant.

From the companies’ perspective, the power of the new AI tools can help lenders comply with regulations and improve their ability to expand credit access to applicants who have traditionally been underserved or considered too risky by old underwriting models.

The key recommendations of the letter include:

1. Don’t wait for perfect information to act. AI will continue to rapidly evolve. Supervisory highlights should be used by regulators to highlight best practices within the industry.
2. Provide written guidance on activity that triggers fair lending oversight. The CFPB should provide clearer guidelines on the conditions that would require a lender to engage in a Less Discriminatory Alternative (LDA) search, as well as the frequency with which such searches will be conducted.
3. Clarify that fair lending applies not only to how applicants are treated, but also how they are selected. Evaluating the creditworthiness of applicants can happen at the earliest stages of the lending process, including during marketing campaign planning. AI tools that can more comprehensively assess the risk of an applicant should be adopted earlier and favored over older models and tools.
4. The FHFA should continue to build upon its 2022 AI Advisory Opinions. The prior advisory opinions offered AI-specific guidance to the GSEs based on select use cases with potential to improve housing finance for consumers.
5. The CFPB should assert that fair lending compliance should be as high a priority as all other parts of the lending process. For companies using AI in credit decisioning, the CFPB should make clear the usage of outdated tools is not sufficient to remain compliant with fair lending laws.
6. Supervisory examination and training should address routine review of financial institutions’ model testing protocols and results. Fair lending examinations should also include reviews of the models used, testing protocols and positive assessment of LDA searches. Data concerning the efficacy of tools and practices should be shared in a forum with regulators and policymakers.

Photo by BoliviaInteligente on Unsplash

Read the September 30, 2024 NCRC article.

The Fair Lending Report of the Consumer Financial Protection Bureau (CFPB) for 2023 is Released

 

The June 2024 Fair Lending Report describes CFPB's fair lending activities in enforcement, guidance and rulemaking, interagency coordination, and outreach and activities for calendar year 2023. It is submitted to Congress. The fair lending activities of the CFPB are summarized here.

Fair Lending Activities

In 2023 the CFPB focused much of its fair lending supervision efforts on: mortgage origination (including redlining, property valuation bias, and HMDA and Regulation C compliance); credit card marketing and the use of alternative data in digital marketing; and on the use of automated systems and models, sometimes marketed as artificial intelligence (AI) and machine learning models, in credit card
originations.

The CFPB’s 2023 mortgage origination work continued to focus on redlining (intentional discrimination against applicants and prospective applicants living or seeking credit in minority neighborhoods, including by discouragement). The CFPB’s mortgage work also included assessing potential discrimination in mortgage underwriting and pricing processes, including assessing whether there were disparities in application, underwriting, and pricing processes, and whether there were weaknesses in fair lending-related compliance management systems. The CFPB’s mortgage origination work also included reviewing residential property appraisal service providers to identify risks that may arise due to potential discrimination or bias as well as HMDA data integrity and validation reviews.

The CFPB continued to assess whether lenders complied with the adverse action notice requirements of the Equal Credit Opportunity Act (ECOA) and Regulation B and evaluated whether lenders maintain policies and procedures that unlawfully exclude property on the basis of geography in underwriting decisions, unlawfully exclude certain types of income, and treat criminal history in an unlawful manner. 

Fair Lending Enforcement

In fair lending enforcement, the CFPB:

(1) Did two ECOA-related public enforcement actions, relating to discrimination on the basis of race and national origin, one against Citibank N.A. (Citibank) and the other against Colony Ridge Development, LLC, and Colony Ridge BV, LLC, and affiliate mortgage company Colony Ridge Land, LLC (collectively, the Colony Ridge defendants).

(2) Took public enforcement actions against two repeat offenders for reporting false, erroneous, or incorrect HMDA data: Freedom Mortgage Corporation (Freedom Mortgage) and Bank of America, N.A.

(3) On October 10, 2023, the CFPB filed a lawsuit against Freedom Mortgage, a residential

mortgage loan originator and servicer, alleging that it submitted legally-required mortgage loan

data that were riddled with errors.

(4) On November 28, 2023, the CFPB issued an order against Bank of America for routinely

submitting falsified HMDA data.5 The CFPB found that between 2016 and late 2020, hundreds

of Bank of America’s loan officers failed to ask applicants for their race, ethnicity, and sex, as

required by law, and instead falsely recorded that the applicants chose not to provide this

information.

(5) In 2023, the CFPB issued several fair lending-related Matters Requiring Attention and entered
Memoranda of Understanding directing entities to take corrective actions that the CFPB will
monitor through follow-up supervisory actions. In these communications, the CFPB directed
mortgage lenders to correct violations relating to redlining, including by institutions providing
consumer remediation designed to spur lending in redlined areas.

Read the full June 2024 CFPB report.

 CFPB Sues Repeat Offender Freedom Mortgage Corporation for Providing False Information to Federal Regulators

The Consumer Financial Protection Bureau (CFPB) filed a lawsuit in federal court on October 10, 2023, alleging that Freedom Mortgage Corporation submitted legally-required mortgage loan data that was riddled with errors. The CFPB alleges that Freedom’s practices violate both the Home Mortgage Disclosure Act (HMDA) and a 2019 consent order. In a recent separate matter, in August 2023 the CFPB fined Freedom $1.75 million for paying illegal kickbacks for mortgage loan referrals. 

Freedom is a privately held nonbank mortgage loan originator and servicer with headquarters in Boca Raton, Florida. In 2020, Freedom reported HMDA data on more than 700,000 mortgage loan applications and originated nearly 400,000 HMDA-reportable loans worth almost $100 billion. Under HMDA, mortgage lenders are required to report information about loan applications and originations to the CFPB and other federal regulators. The public and regulators can use HMDA information to assess if the financial institutions are serving the housing needs of their communities, and to identify possible discrimination.

In 2019, the CFPB found that Freedom had intentionally misreported HMDA data about applicants’ race and ethnicity. For example, certain loan officers were told by managers or other loan officers that when applicants did not provide their race or ethnicity, they should select non-Hispanic white. The 2019 order required Freedom to pay a $1.75 million penalty, improve its compliance management system, and avoid future HMDA violations.

The 2023 lawsuit alleges that the HMDA data Freedom submitted for 2020 contained widespread errors across multiple data fields, and that the errors constitute violations of HMDA, the Consumer Financial Protection Act, and the 2019 order. Specifically, the CFPB alleges: (1) Freedom reported information to regulators with widespread inaccuracies: After the CFPB found 51 errors in an initial review of 159 files in Freedom’s 2020 submission, the company had to resubmit its data. In that resubmission, Freedom corrected errors in 35 different required HMDA data fields. There were errors in over 174,000 data entries affecting nearly 20% of Freedom’s mortgage loan applications; and (2) Freedom violated a 2019 law enforcement order to clean up its deficient data practices. It has failed to do this, and has continued to provide federal regulators with error-ridden data.

Under the Consumer Financial Protection Act (CFPA), the CFPB has the authority to take action against financial institutions violating consumer financial laws, including HMDA. The lawsuit seeks to stop Freedom’s alleged unlawful conduct and for it to pay a civil money penalty which will be deposited in the CFPB’s victims relief fund. 

Read today’s complaint.

Read the October 10, 2023 CFPB release.

 CFPB Orders Citi to Pay $25.9 Million for Illegal Discrimination Against Armenian Americans

The Consumer Financial Protection Bureau (CFPB) has ordered Citi to pay $25.9 million in fines and consumer redress for intentionally and illegally discriminating against credit card applicants the bank identified as Armenian American. From 2015-2021, Citi rejected applicants for certain credit card products, based on their surnames, whom it suspected of being of Armenian descent. Citi supervisors hid the discrimination by instructing employees not to discuss the discrimination in writing or on recorded phone lines. Citi employees also lied about the basis of denial, providing false reasons to denied applicants. Under the order, Citi will pay $1.4 million to harmed consumers and a $24.5 million penalty.

Citibank, N.A. is a national bank headquartered in New York City that issues consumer credit cards, including retail services credit cards for companies like Home Depot and Best Buy. Citi’s parent company is Citigroup (NYSE: C), a global financial services holding company. As of June 30, 2023, Citi had $1.7 trillion in total assets – making it the third-largest bank by asset size in the U.S.

In essence, Citi treated Armenian Americans as criminals who were likely to commit fraud. From at least 2015 through 2021, Citi identified retail services credit card applicants with surnames that Citi employees associated with Armenian national origin as well as applicants in or around Glendale, California. The bank specifically targeted surnames ending in “-ian” and “-yan.” Nicknamed “Little Armenia,” Glendale has approximately 15% of the Armenian American population.

Intentionally denying credit based on national origin is illegal under the Equal Credit Opportunity Act.  Specifically, Citi harmed consumers by:

• Denying credit applications because of borrowers’ ancestry: Citi’s supervisors taught employees how to discriminate against people of perceived Armenian descent using surname suffixes. When Citi identified applicants as possibly having Armenian national origin using this method, the bank used more stringent criteria to evaluate their applications, including denying them totally and requiring additional information or blocking the account. 
• Giving borrowers fake reasons for credit denials: When Citi denied credit applications because of applicants’ perceived Armenian national origin, Citi employees lied about the specific reasons for the adverse actions. For example, a Citi employee explained it had been a while since they had discriminated against a perceived Armenian, and wanted to learn how to cover up the discrimination. S/he was told to decline the credit card application due to suspected credit abuse, which essentially blamed the applicant for the denial.

Under the Consumer Financial Protection Act, the CFPB has the authority to take action against institutions violating consumer financial protection laws, including the Equal Credit Opportunity Act and its implementing Regulation B. 

The CFPB’s order requires Citi to: (1) pay $1.4 million to affected consumers: Consumers who applied for a Citi Retail Services Credit Card between January 1, 2015, and December 31, 2021, and are identified as having been denied the credit card based on national origin discrimination are eligible for redress; and pay a $24.5 million fine to the CFPB’s victims relief fund.

Read today’s order.

Consent Order 

Stipulation 

Read the November 8, 2023 CFPB release.

View case filings

 The CFPB and FTC Accuse TransUnion of Illegal Rental Background Check and Credit Reporting Practices

The Consumer Financial Protection Bureau (CFPB) and Federal Trade Commission (FTC) have requested a federal court to order penalties for the rental screening subsidiary of TransUnion for violations of the Fair Credit Reporting Act. TransUnion: (a) did not make sure that the rental background checks that landlords use to evaluate renters were accurate, and (b) withheld from renters the names of third parties that provided the inaccurate information. The CFPB and FTC's request is to fine TransUnion $15 million for its illegal behavior, stop illegal tenant screening practices,  and make significant improvements to how it reports evictions. Regarding the financial penalty, $11 million would be paid to consumers and $4 million would go to the CFPB's victims relief fund.

Separately, the CFPB has ordered TransUnion to pay $8 million for lying to thousands of consumers about when it placed or removed security freezes and locks on credit reports. TransUnion told consumers the requests were completed when instead the requests joined its multi-year backlog. It also did not keep active-duty members of the military from pre-screened solicitation lists – which protects servicemembers from identity theft. 

The 2018 Fair Credit Reporting Act required TransUnion and other credit reporting companies to offer free security freezes to the public and enhanced protections for active-duty members of the military. This Act also requires that companies respond timely to consumer requests to place or remove security freezes – which with credit locks helps prevent potential identity theft by blocking many third parties from accessing consumers’ credit reports.

TransUnion had annual revenue in excess of $3.7 billion in 2022, and collects information on over 200 million Americans, including information on their payment histories, debt loads, maximum credit limits, current creditors, and related credit relationships. It provides security freezes and security locks of individuals’ consumer reports. TransUnion previously had been accused of improprieties by the CFPB. Those and the current enforcement action stemmed from CFPB's investigations and reports.

Read today’s CFPB and FTC joint complaint and proposed order.

Read today’s CFPB order.

Learn more about credit reports and scores.

Read the CFPB’s 2023 report on consumer complaints about TransUnion and the other two nationwide consumer reporting companies.

Read the remarks of Eric Halperin, the CFPB’s Assistant Director of Enforcement, on today’s actions.

Consumers can submit complaints about financial products and services by visiting the CFPB’s website or by calling (855) 411-CFPB (2372).

Read the October 12, 2023 CFPB article.

 Fair Lending News:

CFPB Releases 2022 Fair Lending Annual Report to Congress

On June 26, 2023, the Consumer Finance Protection Bureau(CFPB) released its Fair Lending Annual Report to Congress, describing its fair lending activities in enforcement and supervision; guidance and rulemaking; interagency coordination; and outreach and education for calendar year 2022.

In 2022, the CFPB’s fair lending work centered on the consumers and communities most affected by unlawful discrimination:

• Working with our federal and state partners to address redlining as well as confronting deep-seated discrimination in the home appraisal industry. 
• The CFPB also released several reports shining a light on factors that may influence fair access to credit, including how medical debt affects tens of millions of consumers’ credit profiles, how people in under-resourced rural areas struggle to access financial services, and the challenges faced by justice-involved individuals and families.
• We also issued several rules and guidance documents reaffirming the importance and applicability of fair lending protections for prospective applicants, applicants for credit, and existing account holders. Through our enforcement and examination activity, interpretive rules and advisory opinions, circulars, and other tools, we continue to make clear that fair lending must be a top priority for all financial institutions.

The Fair Lending Annual Report to Congress fulfills the CFPB’s statutory responsibility to, among other things, report annually to Congress on public enforcement actions taken by other agencies with administrative enforcement responsibilities under the Equal Credit Opportunity Act (ECOA), and assessments of the extent to which compliance with ECOA has been achieved. It also fulfills the statutory requirement that the CFPB, in consultation with HUD, report annually on the utility of the Home Mortgage Disclosure Act’s requirement that covered lenders itemize certain mortgage loan data.

Through 2023 and beyond, the CFPB will continue to stand up for those consumers and small businesses who are the least resourced to fight back against exploitation.

As noted in the Future of Fair Lending section at the end of the Report, we are focused especially on the increased use of advanced and emerging technologies in financial services. Consumers and small businesses are not well-resourced to fight back against—and may not even know they are subject to—algorithmic bias, digital surveillance and data harvesting, dark patterns, and advanced technologies that are black boxes. The CFPB has increased its expertise in data science and analytics to ensure that we can identify fair lending violations at each stage of the credit lifecycle. And we will continue to take a whole-of-government approach to protect consumers from harmful uses of automated systems marketed as artificial intelligence. As the CFPB reiterated in conjunction with the release of our joint statement with the Department of Justice, Federal Trade Commission, and U.S. Equal Employment Opportunity Commission, we will hold creditors and service providers accountable for fully complying with fair lending and other federal consumer financial laws, regardless of the technology they choose to use.

The CFPB also continues to fight against bias in home appraisals and redlining. Families and entire communities are harmed by biased, inaccurate appraisals, as well as geographic discrimination, or redlining. Whether it takes the form of excluding neighborhoods with certain demographics from mainstream credit or targeting them with predatory products, the CFPB is combatting these unlawful practices to achieve meaningfully restorative outcomes for the affected consumers and communities.

The CFPB remains committed to protecting individuals, small businesses, and communities from discrimination, holding institutional and individual bad actors accountable, and ensuring robust and comprehensive remedies for violations of the laws under our jurisdiction. In the years to come, we look forward to advancing our work to ensure a fair, equitable, and nondiscriminatory credit market, with equal economic opportunity for all consumers and their communities.