Equal Credit Opportunity Act: Federal Trade Commission Issues Report
The Federal Trade Commission (FTC) issued a report to the Consumer Financial Protection Bureau (CFPB) regarding the FTC’s enforcement of the Equal Credit Opportunity Act (ECOA). The ECOA, which was enacted in 1974, prohibits creditors from discriminating on the basis of protected classes of people. It also prevents creditors from not counting certain sources of income, such as alimony, public assistance, and veteran’s benefits.
In its report, the FTC reported on a variety of activities. The agency discussed a proposed survey of consumers to collect information about their experiences in buying and financing cars at auto dealerships. They’re interested in the experiences of consumers with both “prime” and “subprime” credit scores. The FTC also noted that it has brought more than 200 actions against auto sellers and financers for deception, fraud, and other illegal practices.
The report also discussed the FTC’s report about “big data.” Big data is a term used to describe the volumes of personal information generated by smartphones and computers that companies use to make product offering decisions, individualized marketing strategies, and consumer behavior predictions. The FTC highlighted the need to avoid discriminatory or exclusionary outcomes from the biases about certain groups of people, while also pointing out that big data can be used in a positive way to help underserved populations.
The agency also described its work in combating fraud in the lending marketplace. While African Americans and Latinos are frequently victims, members of those communities underreport fraud. It noted that auto loan fraud and the denial of mortgages to African-Americans were of particular concern.
The FTC also discussed its work to reach historically underrepresented populations, such as the disability community, LGBT folks, Native Americans, African Americans, and Latinos. The agency’s focus appeared to be educating consumers about fraud and encouraging them to report the fraud to the FTC.
The FTC’s report was submitted to the CFPB so that the CFPB could, in turn, use the information in its report to Congress.