On April 22, 2026, the Consumer Financial Protection Bureau (CFPB) published in the Federal Register a final rule amending Regulation B, the regulation implementing the Equal Credit Opportunity Act (ECOA). The final rule is largely unchanged from the CFPB’s notice of proposed rulemaking issued in November 2025.
Effective July 21, 2026, the final rule:
- Expressly eliminates the “effects test,” commonly referred to as disparate impact.
- Clarifies and narrows the “discouragement” prohibition.
- Includes new prohibitions and conditions for special-purpose credit programs (SPCPs).
The rule follows recent Trump administration actions to curb fair lending supervision and enforcement, including by eliminating references to disparate impact in the Office of Comptroller of the Currency guidance and deferring that office’s upcoming fair lending exams.
Effects test eliminated
Previously, Regulation B indicated that the ECOA authorized disparate-impact claims, which were evaluated using the “effects test.” In a disparate-impact claim, a facially neutral policy is challenged if it has a disproportionate effect on a protected class “along prohibited basis lines,” such as sex, national origin, race, color, age, religion, marital status, or the fact an applicant has exercised any rights under the Consumer Credit Protection Act (or state equivalents), unless the policy meets a legitimate business need that cannot reasonably be achieved, or by using means that are less disparate in their impact.
In the final rule, the CFPB explicitly states that the ECOA does not authorize disparate-impact liability and removes all references to the “effects test.” The CFPB also added a comment stating that the ECOA does not prohibit practices that are facially neutral as to prohibited bases, except to the extent that facially neutral criteria are proxies for protected characteristics designed or applied with the intention of advantaging or disadvantaging individuals based on protected characteristics.
Discouragement narrowed and redefined
The rule finalizes revisions addressing:
- What constitutes an “oral or written statement.”
- What counts as a statement directed to an applicant or prospective applicant.
- The applicable liability standard.
The new requirements apply to credit extended after the rule’s effective date.
Definition of ‘oral or written statement’
“Oral or written statement” is defined as “spoken or written words, or visual images such as symbols, photographs, or videos.” “Oral or written statements” include words in advertising and marketing campaigns, but do not extend to more general acts or practices. The final rule replaces the phrase “acts or practices” with “statements,” meaning that certain routine business practices, such as decisions about branch locations and where to advertise, will not be considered “oral or written statements,” and will not, by themselves, constitute prohibited discouragement.
The official interpretations include examples of prohibited statements (e.g., “don’t bother applying” after learning someone is retired; public statements expressing a discriminatory preference or policy of exclusion; or interview scripts discouraging application on a prohibited basis), along with nonprohibited statements (e.g., statements directed to and encouraging one group to apply for credit; financial literacy encouragement; or statements recommending research into a neighborhood before purchasing a home).
Liability standard
Creditors are prohibited from making oral or written statements directed at applicants or prospective applicants that the creditor “knows or should know” would cause a reasonable person to believe the creditor would deny credit or offer credit on less favorable terms because of a prohibited characteristic. Actual knowledge is not the standard.
Standard for discouragement
Under the rule, statements must be “directed at” applicants or prospective applicants, meaning that encouraging statements directed to one audience are not deemed prohibited discouragement as to others who were not the intended recipients. However, the final rule would not permit statements that express a discriminatory preference or policy of exclusion based on prohibited basis characteristics.
Restrictions on special-purpose credit programs
A for-profit SPCP may no longer use race, color, national origin or sex (or any combination of these characteristics) as eligibility criteria to participate in the program.
Written plans requirements
The final rule requires written plans to include evidence of the need for the program and an explanation of why the targeted class would not receive such credit absent the program. For SPCPs that require persons in the class served by the program to share a common characteristic that would otherwise be a prohibited basis, the written plan must also include an explanation of why using that basis is necessary and cannot be accomplished without using prohibited bases.
The final rule also adds a requirement that if a for-profit SPCP uses common characteristics beyond race, color, national origin or sex – i.e., other otherwise-prohibited bases (such as age, marital status, religion, etc.) – it must provide evidence for each individual participant that, absent the program, the participant would not receive the credit as a result of those specific characteristics.
Tightens ‘effectively denied credit’ standard
The rule removes the word “probably” and the “less favorable terms” alternative from the “would not receive such credit” standard, tightening the threshold for program justification.
Looking forward
The final rule makes significant changes to Regulation B, and creditors should review their existing compliance programs, marketing practices and existing SPCPs to ensure those programs and practices align with the new rule.
However, note that disparate treatment and intentional use of neutral criteria, such as proxies for prohibited characteristics, remain fully prohibited under ECOA and Regulation B. Further, disparate-impact liability is not broadly eliminated – creditors should be aware that state fair lending laws and the Fair Housing Act may still impose disparate-impact liability.