For example, Regulation B ensures that a lender cannot refuse someone from opening a credit card based on marital status. Lenders also can’t prohibit a person receiving Social Security Disability Insurance (SSDI) benefits from qualifying for a loan because they’re receiving government aid.
How Regulation B Works
Regulation B was originally enforced by the Fed. In 2010, the Dodd-Frank Act made the Consumer Financial Protection Bureau (CFPB) responsible for enforcing Regulation B. The CFPB, along with the Department of Justice and Federal Trade Commission, can initiate legal action against lenders that violate Regulation B. If you’ve been unlawfully discriminated against, you have the option to file a lawsuit. Regulation B provides for both actual damages and punitive damages. Punitive damages can total as much as $10,000 in individual lawsuits or up to the lesser of $500,000 or 1% of the financial institution’s net worth if a class action case is initiated. You may also be entitled to compensation for court costs or attorney fees.
Requirements for Regulation B
Under Regulation B, lenders cannot discriminate on the basis of prohibited factors, including:
RaceColor ReligionNational originSexMarital statusAgeUse of public assistance Making past claims under certain consumer protection laws
Lenders also can’t make any oral or written statements designed to discourage people from applying based on one of those prohibited factors. Pre-screening tactics that might weed out applicants based on a prohibited factor are also not allowed. Lenders can’t request any information from potential credit applicants or any information about applicants that could be used to discriminate and that doesn’t have a direct bearing on the credit requested. They also can’t collect information on race, color, religion, national origin, or sex of applicants (except when required by regulatory authorities or if the information is used to test for compliance with fair lending rules). Be wary of lenders who request information about current or former spouses—it’s not allowed in most circumstances unless a spouse will be a user of the account, is applying jointly for credit, is in a community property state and using marital property as collateral, or is relying on spousal or child support as a source of income. Lastly, lenders are not allowed to make decisions for lending credit on the basis of a prohibited factor, such as assuming someone’s income will be interrupted because they will become a parent. Lenders are required to provide written notice of any action taken on a request for credit within 30 days of the time they receive a credit application.
