Equal Credit Opportunity Act

This article is about the United States law. For the specification for a software framework (ECOA), see European Component Oriented Architecture.

Equal Credit Opportunity Act of 1974
Great Seal of the United States
Acronyms (colloquial)ECOA
Citations
Public law88 Stat. 1500, Pub. L. 93–495
Legislative history
  • Signed into law by President Gerald Ford on October 28, 1974
United States Supreme Court cases

The Equal Credit Opportunity Act (ECOA) is a United States law (codified at 15 U.S.C. § 1691 et seq.), enacted October 28, 1974,[1] that makes it unlawful for any creditor to discriminate against any applicant, with respect to any aspect of a credit transaction, on the basis of race, color, religion, national origin, sex, marital status, or age (provided the applicant has the capacity to contract);[2] the applicant's use of a public assistance program to receive all or part of their income; or the applicant's previous good-faith exercise of any right under the Consumer Credit Protection Act. The law applies to any person who, in the ordinary course of business, regularly participates in a credit decision, including banks, retailers, bankcard companies, finance companies, and credit unions.

The part of the law that defines its authority and scope is known as Regulation B,[3] from the (b) that appears in Title 12 part 1002's official identifier: 12 C.F.R. § 1002.1(b) (2017).[4] Failure to comply with Regulation B can subject a financial institution to civil liability for actual and punitive damages in individual or class actions. Liability for punitive damages can be as much as $10,000 in individual actions and the lesser of $500,000 or 1% of the creditor's net worth in class actions.[5]

Before the enactment of the law, lenders and the federal government frequently and explicitly discriminated against female loan applicants and held female applicants to different standards from male applicants.[6] A large coalition of women's and civil rights groups pressured the government to pass the ECOA (and the Housing and Community Development Act of 1974) to prohibit such discrimination.[6][7]

  1. ^ "15 U.S. Code § 1691 - Scope of prohibition". Legal Information Institute. Cornell Law School. Retrieved April 6, 2018.
  2. ^ Dlabay, Les R.; Burrow, James L.; Brad, Brad (2009). Intro to Business. Mason, Ohio: South-Western Cengage Learning. p. 470. ISBN 978-0-538-44561-0. The Equal Credit Opportunity Act prohibits creditors from denying a person credit because of age, race, sex, or marital status.
  3. ^ "12 CFR 1002.1 - Authority, scope and purpose". law.cornell.edu. Retrieved April 27, 2018.
  4. ^ "Electronic Code of Federal Regulations". ecfr.gov. Retrieved April 27, 2018.
  5. ^ Regulation B, Equal Credit Opportunity 12 CFR 202.14(b) as stated in Closing the Gap: A Guide to Equal Opportunity Lending Archived April 19, 2015, at the Wayback Machine, Federal Reserve System of Boston.
  6. ^ a b Thurston, Chloe N., ed. (2018), "Bankers in the Bedroom", At the Boundaries of Homeownership: Credit, Discrimination, and the American State, Cambridge University Press, pp. 142–182, doi:10.1017/9781108380058.006, ISBN 978-1-108-42205-5
  7. ^ Krippner, Greta R. (2017). "Democracy of Credit: Ownership and the Politics of Credit Access in Late Twentieth-Century America". American Journal of Sociology. 123 (1): 1–47. doi:10.1086/692274. ISSN 0002-9602. S2CID 149044094.