On Thursday, November 13, 2025, the Consumer Financial Protection Bureau (CFPB) issued a notice of proposed rulemaking (NPRM) to amend provisions of Regulation B (12 CFR Part 1002), which implements the Equal Credit Opportunity Act (ECOA). The NPRM proposes to modify Regulation B by:
- Removing language supporting disparate-impact liability under the ECOA.
- Narrowing the prohibition on discouragement of applicants or prospective applicants.
- Establishing new standards and additional restrictions on offering special purpose credit programs (SPCPs).
This NPRM is the latest move by the Trump administration to eliminate disparate-impact claims and end “illegal preferences and discrimination,” and, if made final, will have significant legal and compliance ramifications for creditors.
Disparate-impact liability eliminated
Currently, Regulation B indicates that the ECOA authorizes disparate-impact claims, which are evaluated using the “effects test.” In a disparate-impact claim, a plaintiff challenges a facially neutral policy that has a disproportionate effect on a protected class “along prohibited basis lines,” such as sex, national origin, race, gender and religion, that is not justified by a legitimate rationale.
Noting its preliminary determination that “under the best reading of the statute, disparate-impact claims are not applicable under the ECOA,” the CFPB proposes to remove the current Regulation B language that supports disparate-impact liability under the ECOA.[1] As support, the CFPB states that the text of the ECOA does not contain language explicitly recognizing disparate-impact claims, and that the theory of disparate-impact liability relies too heavily on legislative history.
Discouragement further defined
Under Regulation B and the ECOA, creditors may not make oral or written statements that would discourage on a prohibited basis a reasonable person from applying for credit.[2] Currently, “oral or written statements” is not defined.
Under the NPRM, the CFPB proposes to limit “oral or written statements” to “spoken or written words, or visual images such as symbols, photographs, or videos,” instead of broader “acts or practices.” Further, the NPRM would narrow the discouragement prohibition to specifically cover only actual oral or written statements that are “directed at” applicants or prospective applicants, and that the creditor “knows or should know” would “cause a reasonable person to believe the creditor would deny or offer credit on less favorable terms” on a prohibited basis. The CFPB clarifies that the prohibition on discouragement would not be triggered by negative consumer impressions, and that targeted encouraging statements to one group of consumers would not be deemed discouragement as to nonrecipients of such statements.
New standards for offering special purpose credit programs
SPCPs increase the availability of credit to traditionally underserved populations, such as economically disadvantaged individuals. While the ECOA prohibits organizations from discriminating on a prohibited basis in any aspect of a credit transaction, it does allow for-profit creditors offering certain types of SPCPs to limit eligibility to applicants who share one or more common characteristics that would otherwise be prohibited under the ECOA (i.e., race, national origin and sex).[3]
The proposed rule would amend the standards for SPCPs offered by for-profits by imposing new restrictions to “more closely align [SPCPs] with [their] statutory purpose.” Specifically, for-profit organizations would be prohibited from using race, color, national origin or sex to determine program eligibility. These organizations would also be restricted in using religion, marital status, age or income derived from a public assistance program as eligibility criteria. Any organization that uses these restricted bases to determine eligibility for an SPCP would be required to include evidence of the need for the SPCP in its written plan and explain why the class of persons the SPCP is designed for would not receive such credit without the program.
Conclusion
The CFPB’s proposed changes to Regulation B are consequential and – if finalized – may have a significant impact on creditors’ compliance programs, marketing and advertising strategies, and SPCP offerings. However, we caution that state regulators in jurisdictions that have adopted the disparate-impact theory will continue to enforce those laws and regulations, setting the table for potentially dueling state and federal standards.
These proposed changes to disparate-impact liability follow other recent efforts by the administration to limit fair lending supervision and enforcement. In April 2025, the president issued Executive Order 14281, which bars federal agencies from using disparate impact and sets out to “eliminate the use of disparate-impact liability in all contexts to the maximum degree possible.” Soon afterwards, the Office of the Comptroller of the Currency removed references to disparate-impact liability from its guidance and announced a halt to fair lending exams of the banks it supervises until early 2026.
Comments on the proposed rule are due by December 15, 2025.
[1] 12 C.F.R. § 1002.6(a).
[2] Id. § 1002.4(b).
[3] Id. § 1002.8(a).