Targeted marketing and fair lending concerns

Happy Friday, Compliance Family!

Advertisements are everywhere: in our physical mailboxes, our email spam folders, our social media feeds, the apps on our phones, EVERYWHERE. In this age of non-stop marketing and pushes to buy the best or newest products, some of our other priorities can get lost in the shuffle. Let’s take a moment to remember some of our fair lending obligations, which matter even before a credit application is received.

To start, here is a refresher on some of the major fair lending laws. The Equal Credit Opportunity Act (ECOA) and its accompanying Regulation B generally prohibit discriminatory practices in lending. The provisions broadly apply to “any aspect of a credit transaction.” The Fair Housing Act (FHA) prohibits discrimination “in making available a [residential real estate related transaction]” based on a prohibited factor.  NCUA’s nondiscrimination rule prohibits denial or discouragement of an application for a real estate related transaction based on any prohibited basis. There is a great deal of overlap in these regulations, as they all include race, color, religion, national origin, and sex as prohibited basis for making credit decisions. In short, lending fairly means treating members consistently from the very beginning of the lending transaction, including marketing. Keep in mind states have their own nondiscrimination laws that may govern more financial products or name other protected groups. Consult with local counsel to determine how these laws affect your credit union’s marketing strategies.

 

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