Digital redlining could result, the group warns
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The Consumer Federation of America says proposed changes to Regulation B would erode core civil rights protections in lending
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Advocates warn the plan could enable AI-driven discrimination and digital redlining
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CFA urges the CFPB to withdraw the proposal and reaffirm the Equal Credit Opportunity Act
The Consumer Federation of America (CFA) is urging the Consumer Financial Protection Bureau (CFPB) to abandon proposed changes to Regulation B, warning the revisions would significantly weaken enforcement of the Equal Credit Opportunity Act (ECOA) and open the door to discriminatory lending practices.
In a public comment submitted to the agency, CFA argues that the proposal runs counter to congressional intent and decades of bipartisan regulatory precedent by limiting regulators ability to identify discriminatory outcomes in credit markets. The group says the changes could make it easier for discrimination to persistparticularly as lenders increasingly rely on artificial intelligence and automated underwriting tools.
The CFPBs proposal to dismantle the Equal Credit Opportunity Act runs counter to the values of the American public, the financial institutions that serve them, and the clearly stated intentions of Congress, said Adam Rust, CFAs director of financial services. The proposal will strip regulators of the tools they need to identify disparate impacts, encourage redlining, and impose fear in lenders that wish to offer special-purpose credit programs.
Concerns over disparate impact and AI underwriting
A central focus of CFAs criticism is the proposals treatment of disparate impact liabilitya long-standing legal framework that allows regulators to challenge policies that disproportionately harm protected groups, even if discrimination is not explicit.
CFA warns that eliminating or weakening disparate impact standards would make it nearly impossible to police discriminatory outcomes in AI-driven underwriting systems. Automated credit models often rely on complex data inputs and algorithms that can replicate or amplify historical bias, the group says, even when lenders do not intend to discriminate.
Without the ability to examine outcomes, regulators would be left with few tools to detect bias embedded in opaque algorithms, CFA argues. The result, according to the organization, could be widespread discrimination that is difficult to detect and even harder to correct.
Digital redlining and marketing practices
The comment also raises alarms about proposed changes to discouragement standards under Regulation B, which currently prohibit practices that deter protected groups from applying for credit.
CFA says narrowing these standards would weaken protections against redlining, including modern forms that occur through digital advertising and online marketing. Targeted ads, algorithmic audience selection, and data-driven marketing tools can exclude certain communities from seeing credit offers, the group notes, even when no geographic boundaries are explicitly drawn.
Advocates warn that without robust discouragement rules, lenders could legally avoid marketing credit products to certain populations, reinforcing inequities in access to credit and financial services.
Special-purpose credit programs at risk
CFAs third major concern involves special-purpose credit programsinitiatives Congress explicitly authorized to address historic inequities in lending by allowing lenders to design programs for underserved communities.
The proposed rule, CFA says, would impose new compliance burdens and legal uncertainty that could discourage lenders from offering these programs altogether. Instead of expanding access to credit, the changes could have a chilling effect, prompting financial institutions to avoid programs designed to meet special social needs.
According to CFA, this outcome would undermine one of ECOAs core purposes: ensuring fair, equitable, and nondiscriminatory access to credit for consumers and small businesses.
Call to withdraw the proposal
The public comment period on the proposed Regulation B changes closed on December 15, 2025. CFA is calling on the CFPB to withdraw the proposal and reaffirm its commitment to strong civil rights enforcement in credit markets.
The organization argues that weakening ECOA protections at a time of rapid technological change would be especially harmful, leaving consumers vulnerable to discrimination that is harder to see and harder to challenge.
CFA says the CFPB should instead strengthen its oversight of emerging technologies in lending and preserve the legal tools regulators need to ensure equal access to credit nationwide.
Posted: 2025-12-17 18:51:07
