Jeff Sovern is a law professor at St. John’s University. His bio notes that “[t]he New York Times has called him “an expert in consumer law,” a statement echoed by the Chicago Tribune, and Mother Jones.” Recently, in a new blog post on the Consumer Law & Policy Blog, Sovern “advocates very strongly in support of interpreting the “unfairness” prong of UDAAP to encompass discrimination in connection with credit and non-credit consumer financial products and services offered by banks and other persons covered by the Consumer Financial Protection Act (CFPA).” Sovern’s contention was noted in a BallardSpahr blog, Why the CFPB’s expansion of its UDAAP authority to target discrimination requires rulemaking.
The BallardSpahr post notes that “Professor Sovern’s argument misses the point. The consumer financial services industry is not seeking a ‘pass’ when it comes to any form of discrimination. Instead, the industry simply wants to know what are the ‘rules of the road.’ The Equal Credit Opportunity Act is a very specific anti-discrimination statute that proscribes certain types of credit discrimination.” It adds
…if UDAAP covers discrimination more broadly than the ECOA, why wouldn’t Congress have wanted injured consumers to also have a private right of action to use UDAAP to challenge any discrimination they could not challenge under the ECOA? In other words, it seems to me that the absence of a private right of action in the CFPA for UDAAP claims provides strong support for the position that UDAAP does not cover discrimination.
But even assuming arguendo that the interpretation of UDAAP advocated by the CFPB and Professor Sovern is correct, what would that mean? It is unclear whether the ECOA covers discrimination based on marketing or whether it applies only once someone has applied for credit. Would UDAAP now fill that void? And what about the further question of whether the disparate impact theory applies to ECOA and, if not, whether it nevertheless would apply to UDAAP. Those are just a few of the questions the CFPB’s and Professor Sovern’s interpretation raises for consumer credit.
Eric J. Ellman is Senior Vice President for Public Policy and Legal Affairs at the Consumer Data Industry Association (CDIA) in Washington, DC. He also served for eight months as Interim President and CEO of the Association. More