CFPB Wants To Eliminate Disparate-Impact Claims Under ECOA

The Consumer Financial Protection Bureau (CFPB) has proposed a rule to eliminate disparate-impact claims under the Equal Credit Opportunity Act (ECOA) as of November 2025. This would represent a major change in federal fair lending enforcement, limiting ECOA claims to cases of intentional discrimination (disparate treatment) and effectively removing liability for facially neutral policies that result in disproportionate impacts on protected classes.​

Details of the CFPB Proposal

• The CFPB’s proposed amendments to Regulation B would explicitly state that ECOA does not authorize disparate-impact liability.​

• Language and commentary in Regulation B suggesting ECOA supports an “effects test” (basis for disparate-impact claims) would be removed, and new language would clearly state that ECOA does not recognize such claims.​

• The Bureau cites the absence of “effects” language in ECOA—unlike Title VII or the Fair Housing Act, under which disparate-impact is recognized—as a basis for this change.​

• The CFPB’s proposal aligns with an April 2025 executive order directing federal agencies to reduce reliance on disparate-impact liability.​

Policy Rationale

• The CFPB argues that the application of disparate-impact liability may promote what it calls “protected-class balancing,” which could unintentionally incentivize intentional discrimination as lenders attempt to engineer outcomes among protected groups.​

• It further states that ECOA’s statutory purposes are better served by limiting claims to instances of intentional discrimination or policies that serve as proxies for protected characteristics.​

Practical Implications

• If finalized, enforcement and compliance under ECOA would shift from effects-based (disparate-impact) liability to focusing solely on intent-based discrimination (disparate treatment and proxy discrimination).​

• Lenders and creditors would face less regulatory risk regarding facially neutral policies that might result in unequal outcomes, with disparate-impact liability remaining under other statutes like the Fair Housing Act or some state laws.​

• The rule also addresses “discouragement” (defining it more narrowly) and changes requirements for Special Purpose Credit Programs—especially those run by for-profit entities.​

Comment Period and Reaction

• The CFPB’s proposed rule is open for public comment, with comments due by December 15, 2025.​

• Civil rights groups and consumer advocates argue that eliminating disparate-impact claims will weaken fair lending protections and make it harder to address discriminatory outcomes from ostensibly neutral lending practices.​

This proposal marks a fundamental regulatory shift that, if implemented, would have broad effects on the nature of ECOA enforcement and fair lending compliance across the U.S..