Consumer Finance Insights
March 23, 2021

New York DFS Finds Credit Card Underwriter Not in Violation of ECOA

On March 23, 2021, the New York State Department of Financial Services (“DFS”) announced that it had issued a report summarizing its findings on the compliance of the underwriting of a technology company’s credit card with fair lending practices and the Equal Credit Opportunity Act (“ECOA”).

DFS began investigating the credit card’s underwriter, a bank chartered in New York, in November 2019 after seeing consumer complaints on Twitter that the underwriting of the credit card was discriminatory.  A consumer complained that the bank, in its underwriting of the card, was discriminating against women by offering lower credit limits to women and denying women’s accounts unfairly.

In its report, DFS found that the bank did not unlawfully discriminate against women in its underwriting.  Specifically, DFS found that women and men with similar credit characteristics had similar application outcomes and that there was no evidence suggesting that the bank intentionally judged women and men by different standards or had a policy to provide lower credit limits for women.

While finding no violation of the ECOA, DFS concluded in its report that credit reporting suffered from systemic issues that can influence credit history and that as a result, though not unlawfully discriminatory, “the data used by creditors in developing and testing a model can perpetuate unintended biased outcomes.”

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