Equal Credit Opportunity Act
TITLE VII—EQUAL CREDIT
Sec.
701.
Prohibited discrimination; reasons for adverse action.
702.
Definitions.
703.
Regulations.
704.
Administrative enforcement.
704A. Incentives for self-testing and
self-correction.
705.
Relation to State laws.
706.
Civil liability.
707.
Annual reports to Congress.
708.
Effective date.
709.
Short title.
§ 701. Prohibited discrimination; reasons for adverse action
(a) It shall be unlawful for any creditor to
discriminate against any applicant, with respect to any aspect of a credit
transaction--
(1) on the basis of race, color, religion,
national origin, sex or marital status, or age (provided the applicant has the
capacity to contract);
(2) because all or part of the applicant's
income derives from any public assistance program; or
(3) because the applicant has in good faith
exercised any right under the Consumer Credit Protection Act.
(b) It shall not constitute discrimination for purposes
of this title for a creditor--
(1) to make an inquiry of marital status if
such inquiry is for the purpose of ascertaining the creditor's rights and
remedies applicable to the particular extension of credit and not to
discriminate in a determination of credit-worthiness;
(2) to make an inquiry of the applicant's
age or of whether the applicant's income derives from any public assistance
program if such inquiry is for the purpose of determining the amount and
probable continuance of income levels, credit history, or other pertinent
element of credit-worthiness as provided in regulations of the Board;
{{4-30-04 p.6610.49}}
(3) to use any empirically derived credit
system which considers age if such system is demonstrably and statistically
sound in accordance with regulations of the Board, except that in the operation
of such system the age of an elderly applicant may not be assigned a negative
factor or value; or
(4) to make an inquiry or to consider the
age of an elderly applicant when the age of such applicant is to be used by the
creditor in the extension of credit in favor of such applicant.
(c) It is not a violation of this section for a creditor
to refuse to extend credit offered pursuant to--
(1) any credit assistance program expressly
authorized by law for an economically disadvantaged class of persons;
(2) any credit assistance program
administered by a nonprofit organization for its members or an economically
disadvantaged class of persons; or
(3) any special purpose credit program
offered by a profit-making organization to meet special social needs which
meets standards prescribed in regulations by the Board;
if such refusal is required by or made pursuant to such program.
(d)(1) Within thirty days (or such longer reasonable
time as specified in regulations of the Board for any class of credit
transaction) after receipt of a completed application for credit, a creditor
shall notify the applicant of its action on the application.
(2) Each applicant against whom adverse
action is taken shall be entitled to a statement of reasons for such action
from the creditor. A creditor satisfies this obligation by--
{{2-28-92 p.6611}}
(A) providing statements of
reasons in writing as a matter of course to applicants against whom adverse
action is taken; or
(B) giving written notification
of adverse action which discloses (i) the
applicant's right to a statement of reasons within thirty days after receipt by
the creditor of a request made within sixty days after such notification, and
(ii) the identity of the persons or office from which such statement may be
obtained. Such statement may be given orally if the written notification
advises the applicant of his right to have the statement of reasons confirmed
in writing on written request.
(3) A statement of reasons meets the
requirements of this section only if it contains the specific reasons for the
adverse action taken.
(4) Where a creditor has been requested by a
third party to make a specific extension of credit directly or indirectly to an
applicant, the notification and statement of reasons required by this
subsection may be made directly by such creditor, or indirectly through the
third party, provided in either case that the identity of the creditor is
disclosed.
(5) The requirements of paragraph (2), (3),
or (4) may be satisfied by verbal statements or notifications in the case of
any creditor who did not act on more than one hundred and fifty applications
during the calendar year preceding the calendar year in which the adverse
action is taken, as determined under regulations of the Board.
(6) For purposes of this subsection, the
term "adverse action" means a denial or revocation of credit, a
change in the terms of an existing credit arrangement, or a refusal to grant
credit in substantially the amount or on substantially the terms requested.
Such term does not include a refusal to extend additional credit under an
existing credit arrangement where the applicant is delinquent or otherwise in
default, or where such additional credit would exceed a previously established
credit limit.
(e) Each creditor shall promptly furnish an applicant,
upon written request by the applicant made within a reasonable period of time
of the application, a copy of the appraisal report used in connection with the
applicant's application for a loan that is or would have been secured by a lien
on residential real property. The creditor may require the applicant to
reimburse the creditor for the cost of the appraisal.
[Codified to 15 U.S.C. 1691]
[Source: Section 701 of title VII of the Act of
NOTES
Findings and purpose. Section 502 of title
V of the Act of
§ 502. Findings and purpose
The Congress finds that there is a need to insure that the various
financial institutions and other firms engaged in the extensions of credit
exercise their responsibility to make credit available with fairness,
impartiality, and without discrimination on the basis of sex or marital status.
Economic stabilization would be enhanced and compe-tition
among the various financial institutions and other firms engaged in the
extension of credit would be strengthened by an absence of discrimination on
the basis of sex or marital status, as well as by the informed use of credit
which Congress has heretofore sought to promote. It is the purpose of this
[Equal Credit Opportunity] Act to require that financial institutions and other
firms engaged in the extension of credit make that credit equally available to
all creditworthy customers without regard to sex or marital status.
{{
§ 702. Definitions
(a) The definitions and rules
of construction set forth in this section are applicable for the purposes of
this title.
(b) The term "applicant" means any person who
applies to a creditor directly for an extension, renewal, or continuation of
credit, or applies to a creditor indirectly by use of an existing credit plan
for an amount exceeding a previously established credit limit.
(c) The term "Board" refers to the Board of
Governors of the Federal Reserve System.
(d) The term "credit" means the right granted
by a creditor to a debtor to defer payment of debt or to incur debts and defer
its payment or to purchase property or services and defer payment therefor.
(e) The term "creditor" means any person who
regularly extends, renews, or continues credit; any person who regularly
arranges for the extension, renewal, or continuation of credit; or any assignee
of an original creditor who participates in the decision to extend, renew, or
continue credit.
(f) The term "person" means a natural person,
a corporation, government or governmental subdivision or agency, trust, estate,
partnership, cooperative, or association.
(g) Any reference to any requirement imposed under this
title or any provision thereof includes reference to the regulations of the
Board under this title or the provision thereof in question.
[Codified to 15 U.S.C. 1691a]
[Source: Section 702 of title VII of the Act of
§ 703. Regulations
(a)(1) The Board shall
prescribe regulations to carry out the purposes of this title. These
regulations may contain but are not limited to such classifications,
differentiation, or other provision, and may provide for such adjustments and
exceptions for any class of transactions, as in the judgment of the Board are
necessary or proper to effectuate the purposes of this title, to prevent
circumvention or evasion thereof, or to facilitate or substantiate compliance
therewith.
(2) Such regulations may exempt from the
provisions of this title any class of transactions that are not primarily for
personal, family, or household purposes, or business or commercial loans made
available by a financial institution, except that a particular type within a
class of such transactions may be exempted if the Board determines, after
making an express finding that the application of this title or of any
provision of this title of such transaction would not contribute substantially
to effecting the purposes of this title.
(3) An exemption granted pursuant to
paragraph (2) shall be for no longer than five years and shall be extended only
if the Board makes a subsequent determination, in the manner described by such
paragraph, that such exemption remains appropriate.
(4) Pursuant to Board regulations, entities
making business or commercial loans shall maintain such records or other data
relating to such loans as may be necessary to evidence compliance with this
subsection or enforce any action pursuant to the authority of this Act. In no
event shall such records or data be maintained for a period of less than one
year. The Board shall promulgate regulations to implement this paragraph in the
manner prescribed by chapter 5 of title 5, United States Code.
(5) The Board shall provide in regulations
that an applicant for a business or commercial loan shall be provided a written
notice of such applicant's right to receive a written statement of the reasons
for the denial of such loan.
[Codified to 15 U.S.C. 1691b]
[Source: Section 703 of title VII of the Act of
{{
§ 704. Administrative enforcement
(a) Compliance with the requirements imposed under this
title shall be enforced under:
(1) section 8 of the Federal Deposit
Insurance Act, in the case of--
(A) national banks, and Federal
branches and Federal agencies of foreign banks, by the Office of the
Comptroller of the Currency;
(B) member banks of the Federal
Reserve System (other than national banks), branches and agencies of foreign
banks (other than Federal branches, Federal agencies, and insured State
branches of foreign banks), commercial lending companies owned or controlled by
foreign banks, and organizations operating under section 25 or 25(a) of the
Federal Reserve Act, by the Board of Governors of the Federal Reserve System;
and
(C) banks insured by the Federal
Deposit Insurance Corporation (other than members of the Federal Reserve
System) and insured State branches of foreign banks, by the Board of Directors
of the Federal Deposit Insurance Corporation;
(2) Section 8 of the Federal Deposit Insurance
Act, by the Director of the Office of Thrift Supervision, in the case of a
savings association the deposits of which are insured by the Federal Deposit
Insurance Corporation.
(3) The Federal Credit Union Act, by the
Administrator of the National Credit Union Administration with respect to any
Federal Credit Union.
(4) The Acts to regulate commerce, by the
Secretary of Transportation, with respect to all carriers subject to the
jurisdiction of the Surface Transportation Board.
(5) The Federal Aviation Act of 1958, by the
Civil Aeronautics Board with respect to any carrier or foreign air carrier
subject to that Act.
(6) The Packers and Stockyards Act, 1921
(except as provided in section 406 of that Act), by the Secretary of Agriculture
with respect to any activities subject to that Act.
(7) The Farm Credit Act of 1971, by the Farm
Credit Administration with respect to any Federal land bank, Federal land bank
association, Federal intermediate credit bank, and production credit association;
(8) The Securities
Exchange Act of 1934, by the Securities and Exchange Commission with respect to
brokers and dealers; and
(9) The Small Business Investment Act of
1958, by the Small Business Administration, with respect to small business
investment companies.
The terms used in paragraph (1) that are not defined in this title
or otherwise defined in section 3(s) of the Federal Deposit Insurance Act (12
U.S.C. 1813(s)) shall have the meaning given to them in section 1(b) of the International
Banking Act of 1978 (12 U.S.C. 3101).
(b) For the purpose of the exercise by any agency
referred to in subsection (a) of its powers under any Act referred to in that
subsection, a violation of any requirement imposed under this title shall be
deemed to be a violation of a requirement imposed under that Act. In addition
to its powers under any provision of law specifically referred to in subsection
(a), each of the agencies referred to in that subsection may exercise for the
purpose of enforcing compliance with any requirement imposed under this title,
any other authority conferred on it by law. The exercise of the authorities of
any of the agencies referred to in subsection (a) for the purpose of enforcing
compliance with any requirement imposed under this title shall in no way
preclude the exercise of such authorities for the purpose of enforcing
compliance with any other provision of law not relating to the prohibition of
discrimination on the basis of sex or marital status with respect to any aspect
of a credit transaction.
(c) Except to the extent that enforcement of the
requirements imposed under this title is specifically committed to some other
Government agency under subsection (a), the Federal Trade Commission shall
enforce such requirements. For the purpose of the exercise by the Federal Trade
Commission of its functions and powers under the Federal Trade Commission Act,
a violation of any requirement imposed under this title shall be
{{
(d) The authority of the Board to issue regulations
under this title does not impair the authority of any other agency designated
in this section to make rules respecting its own procedures in enforcing
compliance with requirements imposed under this title.
[Codified to 15 U.S.C. 1691c]
[Source: Section 704 of title VII of the Act of
§ 704A. Incentives for self-testing and
self-correction.
(a) PRIVILEGED INFORMATION.--
(1) CONDITIONS FOR PRIVILEGE.--A report or
result of a self-test (as that term is defined by regulations of the Board)
shall be considered to be privileged under paragraph (2) if a creditor--
(A) conducts, or authorizes an
independent third party to conduct, a self-test of any aspect of a credit
transaction by a creditor, in order to determine the level or effectiveness of
compliance with this title by the creditor; and
(B) has identified any possible
violation of this title by the creditor and has taken, or is taking,
appropriate corrective action to address any such possible violation.
(2) PRIVILEGED SELF-TEST.--If a creditor
meets the conditions specified in subparagraphs (A) and (B) of paragraph (1)
with respect to a self-test described in that paragraph, any report or results
of that self-test--
(A) shall be privileged; and
(B) may not be obtained or used
by any applicant, department, or agency in any--
(i) proceeding
or civil action in which one or more violations of this title are alleged; or
(ii) examination or
investigation relating to compliance with this title.
(b) RESULTS OF SELF-TESTING.--
(1) IN GENERAL.--No provision of this
section may be construed to prevent an applicant, department, or agency from
obtaining or using a report or results of any self-test in any proceeding or
civil action in which a violation of this title is alleged, or in any
examination or investigation of compliance with this title if--
(A) the creditor or any person
with lawful access to the report or results--
(i) voluntarily
releases or discloses all, or any part of, the report or results to the
applicant, department, or agency, or to the general public; or
(ii) refers to or
describes the report or results as a defense to charges of violations of this
title against the creditor to whom the self-test relates; or
(B) the report or results are
sought in conjunction with an adjudication or admission of a violation of this
title for the sole purpose of determining an appropriate penalty or remedy.
{{
(2) Disclosure for determination of penalty
or remedy.--Any report or results of a self-test that are disclosed for the
purpose specified in paragraph (1)(B)--
(A) shall be used only for the
particular proceeding in which the adjudication or admission referred to in
paragraph (1)(B) is made; and
(B) may not be used in any other
action or proceeding.
(c) ADJUDICATION.--An applicant, department, or agency
that challenges a privilege asserted under this section may seek a
determination of the existence and application of that privilege in--
(1) a court of
competent jurisdiction; or
(2) an administrative law proceeding with
appropriate jurisdiction.
[Codified to 15 U.S.C. 1691c-1]
[Section 704 of title VII of the Act of
§ 705. Relation to State laws
(a) A request for the signature
of both parties to a marriage for the purpose of creating a valid lien, passing
clear title, waiving inchoate rights to property, or assigning earnings, shall
not constitute discrimination under this title: Provided, however, That
this provision shall not be construed to permit a creditor to take sex or
marital status into account in connection with the evaluation of creditworthiness
of any applicant.
(b) Consideration or application of State property laws
directly or indirectly affecting creditworthiness shall not constitute
discrimination for purposes of this title.
(c) Any provision of State law which prohibits the separate
extension of consumer credit to each party to a marriage shall not apply in any
case where each party to a marriage voluntarily applies for separate credit
from the same creditor: Provided, That in any case where such a State
law is so preempted, each party to the marriage shall be solely responsible for
the debt so contracted.
(d) When each party to a marriage separately and
voluntarily applies for and obtains separate credit accounts with the same
creditor, those accounts shall not be aggregated or otherwise combined for
purposes of determining permissible finance charges or permissible loan
ceilings under the laws of any State or of the
(e) Where the same act or omission constitutes a
violation of this title and of applicable State law, a person aggrieved by such
conduct may bring a legal action to recover monetary damages either under this
title or under such State law, but not both. This election of remedies shall
not apply to court actions in which the relief sought does not include monetary
damages or to administrative actions.
(f) This title does not annul, alter, or affect, or
exempt any peron subject to the provisions of this
title from complying with, the laws of any State with respect to credit
discrimination, except to the extent that those laws are inconsistent with any
provision of this title, and then only to the extent of the inconsistency. The
Board is authorized to determine whether such inconsistencies exist. The Board
may not determine that any State law is inconsistent with any provision of this
title if the Board determines that such law gives greater protection to the
applicant.
(g) The Board shall by regulation exempt from the
requirements of sections 701 and 702 of this title any class of credit transactions
within any State if it determines that under the law of that State that class
of transactions is subject to requirements substantially similar to those
imposed under this title or that such law gives greater protection to the
applicant, and that there is adequate provision for enforcement. Failure to
comply with any
{{
[Codified to 15 U.S.C. 1691d]
[Source: Section 705 of title VII of the Act of
§ 706. Civil liability
(a) Any creditor who fails to
comply with any requirement imposed under this title shall be liable to the
aggrieved applicant for any actual damages subtained
by such applicant acting either in an individual capacity or as a member of a
class.
(b) Any creditor, other than a government or
governmental subdivision or agency, who fails to comply with any requirement
imposed under this title shall be liable to the aggrieved applicant for
punitive damages in an amount not greater than $10,000, in addition to any
actual damages provided in subsection (a), except that in the case of a class
action the total recovery under this subsection shall not exceed the lesser of
$500,000 or 1 per centum of the net worth of the creditor. In determining the
amount of such damages in any action, the court shall consider, among other
relevant factors, the amount of any actual damages awarded, the frequency and
persistence of failures of compliance by the creditor, the resources of the
creditor, the number of persons adversely affected, and the extent to which the
creditor's failure of compliance was intentional.
(c) Upon application by an aggrieved applicant, the
appropriate
(d) In the case of any successful action under
subsection (a), (b), or (c), the costs of the action, together with a
reasonable attorney's fee as determined by the court, shall be added to any
damages awarded by the court under such subsection.
(e) No provision of this title imposing liability shall
apply to any act done or omitted in good faith in conformity with any official
rule, regulation, or interpretation thereof by the Board or in conformity with
any interpretation or approval by an official or employee of the Federal
Reserve System duly authorized by the Board to issue such interpretations or
approvals under such procedures as the Board may prescribe therefor,
notwithstanding that after such act or omission has occurred, such rule,
regulation, interpretation, or approval is amended, rescinded, or determined by
judicial or other authority to be invalid for any reason.
(f) Any action under this section may be brought in the
appropriate
(1) whenever any agency having
responsibility for administrative enforcement under section 704 commences an enforcement
proceeding within two years from the date of the occurrence of the violation,
(2) whenever the Attorney General commences
a civil action under this section within two years from the date of the
occurrence of the violation, then any applicant who has been a victim of the
discrimination which is the subject of such proceeding or civil action may
bring an action under this section not later than one year after the
commencement of that proceeding or action.
(g) The agencies having responsibility for
administrative enforcement under section 704, if unable to obtain compliance
with section 701, are authorized to refer the matter to the Attorney General
with a recommendation that an appropriate civil action be instituted. Each
agency referred to in paragraphs (1), (2), and (3) of section 704(a) shall
refer the matter to the Attorney General whenever the agency has reason to
believe that 1 or more creditors has engaged in a pattern or practice of
discouraging or denying applications for
{{2-28-92 p.6616}}credit in violation
of section 701(a). Each such agency may refer the matter to the Attorney
General whenever the agency has reason to believe that 1 or more creditors has
violated section 701(a).
(h) When a matter is referred to the Attorney General
pursuant to subsection (g), or whenever he has reason to believe that one or
more creditors are engaged in a pattern or practice in violation of this title,
the Attorney General may bring a civil action in any appropriate United States
district court for such relief as may be appropriate, including actual and
punitive damages and injunctive relief.
(i) No person aggrieved by a
violation of this title and by a violation of section 805 of the Civil Rights
Act of 1968 shall recover under this title and section 812 of the Civil Rights
Act of 1968, if such violation is based on the same transaction.
(j) Nothing in this title shall be construed to prohibit
the discovery of a creditor's credit granting standards under appropriate
discovery procedures in the court or agency in which an action or proceeding is
brought.
(k) NOTICE TO HUD OF VIOLATIONS.--Whenever an agency
referred to in paragraph (1), (2), or (3) of section 704(a)--
(1) has reason to believe, as a result of
receiving a consumer complaint, conducting a consumer compliance examination,
or otherwise, that a violation of this title has occurred;
(2) has reason to believe that the alleged
violation would be a violation of the Fair Housing Act; and
(3) does not refer the matter to the
Attorney General pursuant to subsection (g), the agency shall notify the
Secretary of Housing and Urban Development of the violation, and shall notify
the applicant that the Secretary of Housing and Urban Development has been
notified of the alleged violation and that remedies for the violation may be
available under the Fair Housing Act.
[Codified to 15 U.S.C. 1691e]
[Source: Section 706 of title VII of the Act of
§ 707. Annual reports to Congress
Each year, the Board and the Attorney General shall, respectively,
make reports to the Congress concerning the administration of their functions
under this title, including such recommendations as the Board and the Attorney
General, respectively, deem necessary or appropriate. In addition, each report
of the Board shall include its assessment of the extent to which compliance
with the requirements of this title is being achieved, and a summary of the
enforcement actions taken by each of the agencies assigned administrative
enforcement responsibilities under section 704.
[Codified to 15 U.S.C. 1691f]
[Source: Section 707 of title VII of the Act of
§ 708. Effective date
This title takes effect upon the expiration of one year after the
date of its enactment. The amendments made by the Equal Credit Opportunity Act
Amendments of 1976 shall take effect on the date of enactment thereof and shall
apply to any violation occurring on or after such date, except that the
amendments made to section 701 of the Equal Credit Opportunity Act shall take
effect 12 months after the date of enactment.
{{
[Codified to 15 U.S.C. 1691 note]
[Source: Section 708 (formerly 707) of title
VII of the Act of
§ 709. Short title
This title may be cited as the "Equal Credit Opportunity
Act."
[Codified to 15 U.S.C. 1691 note]
[Source: Section 709 of title VII of the Act of
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