On Nov. 12, 2025, the Consumer Financial Protection Bureau (CFPB) proposed amending Regulation B (Federal Register: Equal Credit Opportunity Act (Regulation B)) to clarify disparate impact liability, discouragement of applicants and special purpose credit programs (SPCPs).

The CFPB proposes eliminating disparate-impact claims and the “effects test” under Regulation B. The effects test is where a practice may be considered discriminatory if it has a disproportionately negative impact on a protected class, even without intent to discriminate. Effects test language would be removed from Regulation B. The regulation would prohibit intentional discrimination and disparate treatment only. Disparate treatment is a form of intentional discrimination, and occurs when a lender treats a credit applicant differently based on one of the prohibited bases.

Regulation B prohibits creditors from making written or oral statements to applicants, or prospective applicants that discourage a reasonable person from applying for credit. The proposed rule clarifies that words or images would not constitute prohibited discouragement, even if they had an effect that some consumers could find discouraging. Instead, discouragement only pertains to actual oral or written statements by creditors to applicants or prospective applicants. It would also limit liability to statements a creditor knows, or should know, would cause a reasonable person to believe they would be denied credit or offered worse terms because of a prohibited basis, rather than statements that merely create negative impressions. The proposal clarifies that encouraging statements by creditors directed at one group of consumers is not prohibited discouragement as to applicants or prospective applicants who were not the intended recipients of the statements.

The third major change concerns SPCPs offered by for-profit organizations. The CFPB proposes to amend the standards for SPCPs. The proposal would prohibit these programs from using race, sex, color or national origin as criteria to qualify.

Doeren Mayhew’s compliance pros will continue to monitor this proposed change, and any others impacting financial institutions, to help institutions remain compliant.