Compliance Question of the Week

Can a credit union have a lending promotion where people living in a certain area (like close to a new branch) get a discount on their interest rate?

While there is no specific provision against doing a promotion in a certain area, it is essentially impossible to do it without disparate impact. If you run a promotion that has a disparate impact, you will be in violation of the Equal Credit Opportunity Act. The Equal Credit Opportunity Act generally prohibits credit unions from intentional or unintentional discrimination regarding any aspect of a credit transaction. Credit unions may not deny credit to any member based on race, color, religion, national origin, sex, marital status, age, and receipt of public assistance. Therefore, a credit union should not offer a promotion that is based on a geographic area.

Related Links
12 CFR 1002


Questions? Contact the Compliance Hotline: 1.800.546.4465,

Posted in Compliance News.