Journal of Law and Policy


The Equal Credit Opportunity Act (“ECOA”) prohibits credit discrimination because of sex, marital status, race, age, and other personal attributes. Congress enacted the ECOA in 1974 to eliminate unfair lending practices that inhibit equality in the credit industry. Recently, the Consumer Financial Protection Bureau (“CFPB” or “Bureau”) sued several automobile financiers and alleged ECOA violations in the various complaints; the resulting settlements became controversial when critics questioned the CFPB’s use of an evidentiary standard known as “disparate impact” to support its discrimination claims. While plaintiffs may use disparate impact theory to prove unintentional discrimination, they may also use another analytical framework called “disparate treatment” to prove intentional discrimination. Because disparate impact theory imposes liability on defendants regardless of whether they intended to discriminate or not, critics are skeptical about its validity.This Article explores whether ECOA plaintiffs can use impact analysis to prove lending discrimination claims. This Article argues that from a historical perspective, the decision supports ECOA disparate impact liability. It proposes a legislative reform and urges Congress to amend the ECOA’s text to overtly state what the drafters implicitly understood—that the statute authorizes disparate impact. However, if Congress fails to amend expeditiously, this Article urges the U.S. Supreme Court to follow recent precedent and find that the ECOA authorizes disparate impact liability based on its background.