CFPB Sued Over Fair Lending Rule Under Equal Credit Opportunity Act

A set of nonprofit and for-profit organizations filed suit against the Consumer Financial Protection Bureau (“CFPB”) and its Acting Director Russell Vought, asking the court to vacate the CFPB’s final rule amending the regulations under the Equal Credit Opportunity Act (“ECOA”). The plaintiffs filed the complaint in the federal district court for the District of Columbia on May 27, 2026.

The ECOA/Regulation B Final Rule

As we explained in our November Legal Update, including on Mayer Brown’s Financial Services Focus podcast, the CFPB conducted a rulemaking to revise ECOA’s Regulation B. ECOA generally prohibits creditors from discriminating against applicants on the basis of race, color, religion, national origin, sex, marital status, age, or other enumerated factors. On April 22, 2026, the CFPB published a final rule in substantively the same form as the proposal, making the following three primary changes to Regulation B:

• Fulfilling President Donald Trump’s mandate by declaring that ECOA does not impose disparate impact liability;
• Narrowing the circumstances under which a creditor violates ECOA by discouraging applicants on a prohibited basis; and
• Significantly limiting the ability of for-profit institutions to offer special purpose credit programs, particularly those based on race, color, national origin, or sex.

The final rule is set to become effective on July 21, 2026.

The Plaintiffs’ Complaint

The plaintiffs include two nonprofit organizations, the missions of which include promoting equitable housing financing opportunities and expanding access to credit. The other two plaintiffs are private companies that provide services to financial institutions and others in the form of statistical analyses, software, and other fair lending compliance support and expertise.

Substantive Claims

The plaintiffs first assert that the CFPB is wrong on the law, arguing that Congress intended ECOA to prohibit disparate impact discrimination, to broadly prohibit discouraging potential applicants on a prohibited basis, and to allow for-profit institutions to conduct special purpose credit programs to address social needs. The plaintiffs point to legislative history, similarities between ECOA and other federal anti-discrimination statutes, and court opinions in support of their argument that the CFPB did not sufficiently justify its decision to change what they claim is a 50-year history of consistent interpretations of ECOA and Regulation B.

Procedural Claims

Otherwise, the complaint’s claims largely attack the CFPB’s rulemaking processes, arguing that the agency failed to provide a sufficient opportunity for public comment and failed to respond sufficiently to the issues the commenters raised. First, while the agency received over 64,000 comments on its November 2025 proposed rule, the plaintiffs argue that the 32-day comment period was too short for the public to provide meaningful analysis of the proposal or to submit relevant data, views, or arguments, including regarding the rule’s quantitative or qualitative costs. The plaintiffs also claim that the CFPB did not sufficiently consider or respond to the comments it received, offering no evidence of changed facts or circumstances that would justify the changed interpretation, nor any substantive responses to the data and studies the commenters provided.

In addition, the plaintiffs claim that the agency failed to conduct the required cost-benefit analyses, including regarding the rule’s potential impacts on small businesses (including both small creditors and small business credit applicants). While the rule can largely be described as de-regulatory, the plaintiffs assert that the CFPB failed to recognize or consider the costly impact on “potential reliance interests.” The complaint argues that entities like the plaintiffs have spent significant time and resources developing programs, products, and services to address disparate impact discrimination, and that consumers, communities, creditors, and governments have come to rely on Regulation B’s “well-settled” interpretation. The plaintiffs claim the CFPB failed to consider the costs of the purported thwarting of those reliance interests. Further, the plaintiffs claim that the CFPB did not consider the regulatory burden for those creditors that must develop one set of compliance rules for mortgage lending (subject to the Fair Housing Act and its disparate impact principles) and another set for other types of loans.

Director Drama

At the risk of burying the lede, the plaintiffs also claim that, in any event, the rule is invalid, because Russell Vought does not have lawful authority to serve as the Director of the CFPB, and the CFPB cannot issue rules without a Director. The complaint asserts that President Trump’s termination of Rohit Chopra as CFPB Director in February 2025 did not provide the authority to rely on the Federal Vacancy Reform Act (“FVRA”), which allows the appointment of an acting officer under limited circumstances. Since the Senate has not otherwise confirmed Russell Vought or anyone else as the CFPB Director, and the Dodd-Frank Act vests the CFPB’s rulemaking authority in a Director, the plaintiffs argue this rulemaking is unauthorized and invalid. Mr. Vought has served in an acting position since February 7, 2025.

The Federal Vacancy Reform Act created somewhat similar drama in connection with President Trump’s appointment of a CFPB leader during his first term. As we have described in detail in Mayer Brown’s Consumer Financial Services Review, in November 2017, President Trump named Mick Mulvaney as Acting CFPB Director, who sought to displace the current Deputy Director Leandra English. For a time, both officials claimed authority to lead the agency under clashing interpretations of the FVRA and the Dodd-Frank Act, with Mr. Mulvaney’s arguments ultimately prevailing. While many questions about the CFPB’s authority and leadership have since been resolved, the plaintiffs now challenge Mr. Vought’s status and the rulemaking’s validity.

Plaintiffs’ Purported Injury and Constitutional Standing

As indicated above, the CFPB’s final rule is not yet effective, and the complaint does not include any claims that any applicant for credit was harmed by disparate impact discrimination or the rule’s other changes.

The non-profit plaintiffs are asserting organizational standing, essentially, standing based on an alleged injury to their mission that depletes their resources. Organizational standing requires a showing of the traditional elements of standing—i.e., injury-in-fact, causation, and redressability—with the first element being the most important and most typical stumbling block. To satisfy the first element, the plaintiffs here must establish that CFPB’s final rule “directly affected and interfered with [their] core business activities,” with a consequent drain on their organizational resources.¹1 Plaintiffs make numerous allegations seeking to satisfy that standard (e.g., describing how the work of co-plaintiff National Fair Housing Alliance (“NFHA”) on mitigating disparate impact-risk under ECOA will grind to a halt as creditors and others in the ecosystem cease to engage with NFHA on those topics in the wake of the challenged final rule). Organizational standing tends to be harder to establish than a traditional, direct pocketbook injury. In 2018, for example, NFHA had a case challenging HUD regulations tossed for lack of standing.² Accordingly, we anticipate that this issue will be hotly contested.

The private company plaintiffs claim that the rulemaking impairs many of their core business activities and has caused them economic injury. Specifically, those plaintiffs claim that creditors and others engage them, or used to engage them, to assist in identifying potential disparate impact risks and mitigating those risks by identifying alternatives to lessen any such impacts. Those private plaintiffs claim that the rule thus directly reduces creditors’ demand for their products and services. Plaintiff SolasAI, for example, alleges that its “[c]lients [already] have reduced the resources they expend on SolasAI’s services.” That comes across as a more traditional pocketbook injury that provides a stronger basis for standing.

Key Takeaways

As mentioned above, the plaintiffs ask the court to declare that the CFPB’s final ECOA/Regulation B rule is arbitrary, capricious, or otherwise contrary to law; exceeds the agency’s statutory authority; and was issued without observance of required procedures. The plaintiffs request that the court vacate the rule and award plaintiffs their costs and attorney’s fees. The plaintiffs did not ask for an injunction or other temporary relief from the applicability of the rule, neither as applied to them nor with nationwide effect.

The litigation challenge is no surprise to anyone following this rule, or, frankly, any of the CFPB’s actions over the past 15-plus years—many of the agency’s bolder steps have been challenged, regardless of the federal administration’s political alignment. As to this Regulation B rulemaking, litigation strategists have pondered the timing and nature of such a challenge, the exact identity of the plaintiffs, the venue, and what standing the potential plaintiffs would claim. While other plaintiffs may assert their own challenges to the rule, we have at least some answers about the nature and source of the first attack, although it may be months or years before we get answers about the outcome. Alternatively, the court may quickly question the plaintiffs’ standing to bring the suit and its ripeness for adjudication.

¹ FDA v. All. for Hippocratic Medicine, 602 U.S. 367 (2024).

² Nat’l Fair Hous. All. v. Carson, 330 F. Supp. 3d 14, 46 (D.D.C. 2018).