UNITED STATES OF AMERICA

FEDERAL TRADE COMMISSION

WASHINGTON, D.C. 20580

Division of Financial Practices

 

February 1, 2023

Patrice Alexander Ficklin, Assistant Director 

Office of Fair Lending & Equal Opportunity

Bureau of Consumer Financial Protection 

1700 G Street, N.W.

Washington, D.C. 20552

Dear Ms. Ficklin: 

This letter responds to your request for information concerning the Federal Trade 

Commission’s (Commission or FTC) enforcement activities related to compliance with 

Regulation B and the Equal Credit Opportunity Act (ECOA).0F

1

 You request this information for 

use in preparing the Bureau of Consumer Financial Protection’s (CFPB) 2022 Annual Report to 

Congress. Specifically, you ask for information concerning the FTC’s activities with respect to 

Regulation B during 2022. We are pleased to provide the requested information below.1F

2

I. FTC Role in Administering and Enforcing Regulation B

The Dodd-Frank Act, signed into law on July 21, 2010, substantially restructured the 

financial services law enforcement and regulatory system. Among other things, the Act made 

important changes to the ECOA and other consumer laws, such as giving the CFPB rulemaking 

and enforcement authority for the ECOA. Under the Act, the FTC retained its authority to 

enforce the ECOA and Regulation B. In addition, the Act gave the Commission the authority to 

enforce any CFPB rules applicable to entities within the FTC’s jurisdiction, which include most 

providers of financial services that are not banks, thrifts, or federal credit unions.2F

3

 In accordance 

with the memorandum of understanding that the Commission and the CFPB entered into in 

January 2012 and reauthorized in 2015 and again in 2019, and consistent with the Dodd-Frank 

Act, the Commission has been coordinating certain law enforcement, rulemaking, and other 

1

 The ECOA is at 15 U.S.C. § 1691 et seq.; the CFPB’s Regulation B is at 12 C.F.R. Part 1002; the Federal Reserve 

Board’s (Board) Regulation B is at 12 C.F.R. Part 202. 

2

 A copy of this letter is being provided to the Board’s Division of Consumer and Community Affairs, in connection 

with its responsibility for some aspects of the Regulations after the transfer date of July 21, 2011. Among other 

things, the Board retained responsibility for implementing Regulation B with respect to certain motor vehicle 

dealers, under the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act or Act), Pub. L. 

111-203, 124 Stat. 1376 (July 21, 2010). See, e.g., Dodd-Frank Act, § 1029 and Subtitle H. 

3

 The FTC has authority to enforce the ECOA and Regulation B as to entities for which Congress has not

committed enforcement to some other government agency. See 15 U.S.C. § 1691c(c).
2 

activities with the CFPB.3F

4

 

II. Regulation B (ECOA)

In 2022, the FTC engaged in enforcement, research, and policy development related to 

the ECOA. Further, the Commission provided the public with business and consumer education 

materials to promote business compliance with the law and to help consumers protect themselves 

from noncompliant businesses. This letter provides information regarding some of the FTC’s 

enforcement, research and policy development, and educational initiatives.4F

5

 

A. Fair Lending: Enforcement

In 2022, the FTC and the State of Illinois brought an enforcement action in federal court 

against Napleton, a large multistate auto group based in Illinois, alleging, among other things, 

that defendants violated the ECOA and Regulation B by discriminating against Black consumers, 

charging them more in financing for interest rate markups and illegal junk fees for unwanted 

“add-ons” that they sneaked onto customers’ bills.5F

6

 According to the FTC’s complaint, among 

other things, defendants would often wait until the end of the hours-long negotiation process to 

slip junk fees for add-on products and services into consumers’ purchase contracts, which can

run as long as 60 pages.6F

7

 Defendants agreed to pay $10 million to settle all the charges, a record 

setting monetary judgment for an FTC auto lending case.7F

8

 Defendants are also required to 

establish a fair lending program that will, among other components, cap the amount of any 

4

 See FTC, Press Releases, Federal Trade Commission, Consumer Financial Protection Bureau Pledge to Work 

Together to Protect Consumers (Jan. 23, 2012), available at https://www.ftc.gov/opa/2012/01/ftccfpb.shtm, and

FTC, CFPB Reauthorize Memorandum of Understanding (Mar. 12, 2015), available at https://www.ftc.gov/newsevents/press-releases/2015/03/ftc-cfpb-reauthorize-memorandum-understanding; see also FTC and CFPB 

Reauthorize Memorandum of Understanding (Feb. 26, 2019), available at https://www.ftc.gov/news-events/pressreleases/2019/02/ftc-cfpb-reauthorize-memorandum-understanding, and Dodd-Frank Act, § 1024. 

5

 Your letter also asks for specific data regarding compliance examinations, including the extent of compliance, 

number of entities examined, and compliance challenges experienced by entities subject to the FTC’s jurisdiction. 

The Commission does not conduct compliance examinations or collect compliance-related data concerning the nonbank entities within its jurisdiction. As a result, this letter does not provide this information.

6

 FTC v. North American Automotive Services, Inc., No. 22-cv-01690 (N.D. Ill., filed Mar. 31, 2022), available at

https://www.ftc.gov/system/files/ftc_gov/pdf/1%20-%20Joint%20Complaint.pdf. Chair Khan and Commissioner 

Slaughter issued a concurring statement. See Joint Statement of Chair Lina M. Khan and Commissioner Rebecca 

Kelly Slaughter in the Matter of Napleton Automotive Group (Mar. 31, 2022), available at 

https://www.ftc.gov/news-events/news/speeches/joint-statement-chair-lina-m-khan-commissioner-rebecca-kellyslaughter-matter-napleton-automotive. 

 

7

 Id. See also FTC, Press Release, FTC Takes Action Against Multistate Auto Dealer Napleton for Sneaking Illegal 

Junk Fees onto Bills and Discriminating Against Black Consumers (Apr. 1, 2022), available at

https://www.ftc.gov/news-events/news/press-releases/2022/04/ftc-takes-action-against-multistate-auto-dealernapleton-sneaking-illegal-junk-fees-bills. 

8

 FTC v. North Amer. Auto. Servs., Inc., No. 22-cv-01690 (N.D. Ill. Mar. 31, 2022) (stipulated order for permanent 

injunction, monetary judgment, and other relief), available at https://www.ftc.gov/system/files/ftc_gov/pdf/6-

1%20Stipulated%20Order.pdf. 
3 

additional interest markup they charge consumers.8F

9

 In November, the FTC sent payments 

totaling more than $9.8 million to people who were harmed by Napleton Auto’s junk fees and 

discriminatory practices.9F

10

In 2022, the FTC brought an action in federal court against Maryland-based Passport 

Automotive Group, alleging that defendants violated the ECOA and Regulation B, and also 

violated the FTC Act by engaging in unfair practices, by discriminating against Black and Latino 

consumers, charging them higher financing costs and illegal junk fees.10F

11 In its complaint, the 

FTC alleges, among other things, that Passport regularly advertised certified, reconditioned, or 

inspected cars at specific prices, but then added extra certification, reconditioning, or inspection 

fees that it falsely claimed consumers are required to pay, charging Black and Latino consumers 

more for the fees and imposing the fees more often.11F

12 The FTC also alleges that Passport 

charged Black and Latino consumers hundreds of dollars more in financing costs for interest rate 

markups than White consumers.12F

13 Among other things, Defendants agreed to pay more than 

$3.3 million to settle the FTC’s lawsuit, which will be used to refund consumers harmed by 

Passport’s conduct; the order also requires defendants to establish a fair lending program to 

ensure against discrimination going forward, including requiring each Passport dealership to 

either charge no financing markup or charge the same markup rate to all consumers.13F

14 

In 2022, the FTC also mailed refund checks in connection with the orders in another 

matter that was previously filed. The Federal Trade Commission sent a second round of refund 

checks to 3,376 people who bought a car from Bronx Honda and were affected by the company’s 

9

 Id. 

10 See FTC, Press Release, FTC Sends Checks to People Who Had Junk Fees Added to Their Vehicle Purchases

(Nov. 14, 2022), available at https://www.ftc.gov/enforcement/refunds/ed-napleton-automotive-group-refunds. 

11 FTC v. Passport Auto. Grp., Inc., No. 8:22-cv-02670-GLS (D. Md., filed Oct. 18, 2022), available at

https://www.ftc.gov/system/files/ftc_gov/pdf/Complaint%20Passport%20Auto%20Group%2C%20Inc.%2C%20et%

20al..pdf. Chair Khan, Commissioner Slaughter, and Commissioner Bedoya issued a joint majority statement, 

available at https://www.ftc.gov/system/files/ftc_gov/pdf/joint-statement-of-chair-lina-m.-khan-commissionerrebecca-kelly-slaughter-and-commissioner-alvaro-m.-bedoya-in-the-matter-of-passport-auto-group.pdf; 

Commissioner Wilson issued a concurring and dissenting statement, available at 

https://www.ftc.gov/system/files/ftc_gov/pdf/commissioner-wilson-passport-statement.pdf; then-Commissioner 

Phillips issued a dissenting statement, available at https://www.ftc.gov/system/files/ftc_gov/pdf/DissentingStatement-of-Commissioner-Noah-Joshua-Phillips.pdf. This is the second FTC action against Passport in recent 

years. See https://www.ftc.gov/news-events/news/press-releases/2018/10/washington-dc-area-car-dealershipsmarketing-firm-settle-deceptive-advertising-charges. 

12 See id. See also FTC, Press Release, Federal Trade Commission Takes Action Against Passport Automotive 

Group for Illegally Charging Junk Fees and Discriminating Against Black and Latino Customers (Oct. 18, 2022), 

available at https://www.ftc.gov/news-events/news/press-releases/2022/10/federal-trade-commission-takes-actionagainst-passport-automotive-group-illegally-charging-junk-fees. 

13 See supra notes 11 and 12. 

14 FTC v. Passport Auto. Grp., Inc., No. 8:22-cv-02670 (D. Md. Oct. 18, 2022) (stipulated order for permanent 

injunction, monetary judgment, and other relief), available at

https://www.ftc.gov/system/files/ftc_gov/pdf/Order%20As%20Filed.pdf. 
4 

unlawful and discriminatory practices.14F

15 

B. Fair Lending: Research and Policy Development

1. Combatting Online Harms Through Innovation Report 

In 2022, the FTC issued a report to Congress titled “Combatting Online Harms Through 

Innovation,” warning about using artificial intelligence (AI) to combat online problems and 

urging policymakers to exercise “great caution” about relying on it as a policy solution.15F

16 The 

report explains that the use of AI, particularly by big tech platforms and other companies, comes 

with limitations and problems of its own. The report outlines significant concerns that AI tools 

can be inaccurate, biased, and discriminatory by design – and can harm marginalized 

communities – and incentivize relying on increasingly invasive forms of commercial 

surveillance.16F

17 The report highlighted that, in addition to inherent design flaws, AI tools can 

reflect biases of its developers that lead to faulty and potentially illegal outcomes, and provides 

analysis as to why AI tools could produce unfair or biased results. It also includes examples of 

instances in which AI tools resulted in discrimination against protected classes of people or 

overblocked content in ways that can serve to reduce freedom of expression.17F

18 

2. Fifteenth Annual FTC Microeconomics Conference (Designing 

Dealer Compensation in the Auto Loan Market: Implications from a 

Policy Change) 

In 2022, the FTC’s Bureau of Economics co-hosted the Fifteenth Annual FTC 

Microeconomics Conference, which included a paper session and discussion on designing dealer 

15 See FTC, Press Release, FTC sends Refunds to Victims of Bronx Honda’s Illegal Lending and Sales Practices

(Mar. 2022), available at https://www.ftc.gov/enforcement/refunds/bronx-honda-refunds. 

16 See FTC, Combatting Online Harms Through Innovation: Report to Congress (June 16, 2022) (Report to 

Congress), available at 

https://www.ftc.gov/system/files/ftc_gov/pdf/Combatting%20Online%20Harms%20Through%20Innovation%3B%

20Federal%20Trade%20Commission%20Report%20to%20Congress.pdf. Chair Khan, Commissioner Slaughter, 

and Commissioner Bedoya issued separate statements, available at 

https://www.ftc.gov/system/files/ftc_gov/pdf/Khan-Speech-AI-Report.pdf, 

https://www.ftc.gov/system/files/ftc_gov/pdf/P214501AIReportSlaughterStatement.pdf, and 

https://www.ftc.gov/system/files/ftc_gov/pdf/P214501AIReportBedoyaStatement.pdf, respectively; Commissioner 

Wilson issued a concurring statement, available at 

https://www.ftc.gov/system/files/ftc_gov/pdf/P214501AIReportWilsonStatement.pdf; then-Commissioner Phillips 

issued a dissenting statement, available at 

https://www.ftc.gov/system/files/ftc_gov/pdf/Commissioner%20Phillips%20Dissent%20to%20AI%20Report%20%

28FINAL%206.16.22%20noon%29_0.pdf. See also FTC, Press Release, FTC Report Warns About Using Artificial 

Intelligence to Combat Online Problems (Press Release) (June 16, 2022), available at https://www.ftc.gov/newsevents/news/press-releases/2022/06/ftc-report-warns-about-using-artificial-intelligence-combat-online-problems. 

17 See supra note 16, Report to Congress, at 43-46. 

18 See supra note 16, Report to Congress and Press Release. 
5 

compensation in the auto loan market.18F

19 Among other things, the segment addressed how the 

discretionary markup of interest rates can vary systematically by protected characteristics such as 

gender and race, and it also referenced the ECOA protections.19F

20 The segment also addressed 

research that explored the impact of nondiscretionary models of dealer compensation on 

consumers.20F

21 

3. Military Outreach 

In 2022, the FTC’s staff continued its work as a liaison to the American Bar 

Association’s Standing Committee on Legal Assistance for Military Personnel (ABA LAMP). 

The ABA LAMP Committee supports initiatives to deliver legal assistance and services to 

servicemembers, veterans, and their families. For example, during ABA LAMP trainings and 

meetings, FTC staff addressed issues related to military consumers’ (and other consumers’) 

rights pertaining to the anti-discrimination provisions in the ECOA and Regulation B. 

4. Interagency Task Forces on Fair Lending

 The FTC continues to serve as a member of the Interagency Task Force on Fair 

Lending, a joint undertaking with the CFPB, the Department of Justice, the Department of 

Housing and Urban Development, and the federal banking regulatory agencies. Task Force 

members meet regularly to share information and discuss policy issues. 

 

In 2022, the FTC also continued its participation in the Interagency Fair Lending 

Methodologies Working Group. The FTC staff, along with the staff of the CFPB, Federal 

Housing Finance Agency, U.S. Department of Housing and Urban Development, U.S. 

Department of Justice and the federal banking agencies, coordinate and share information on 

analytical methodologies used in enforcement of and supervision for compliance with fair 

lending laws, including the ECOA, among others. 

C. Fair Lending: Consumer and Business Education 

In 2022, the Commission engaged in efforts to provide education on significant issues to 

which Regulation B pertains. The FTC released guidance for consumers reiterating that credit 

discrimination is illegal under federal law, for banks, credit unions, mortgage companies, 

19 See Fifteenth Annual FTC Microeconomics Conference, Paper Session (Nov. 3, 2022), Zhenling Jiang (Wharton 

School, University of Pennsylvania), Yanhao “Max” Wei (Marshall School of Business, University of Southern 

California), Tat Chan (Olin Business School, Washington University in St. Louis), and Nasser Hamdi (Equifax, Inc.) 

Designing Dealer Compensation in the Auto Loan Market: Implications from a Policy Change, available at

https://www.ftc.gov/news-events/events/2022/11/fifteenth-annual-federal-trade-commission-microeconomicsconference. The participants’ presentation slides and their paper are available at that site.

20 See id.

21 See supra note 19. A transcript including remarks from this session’s participants is also available. See

https://www.ftc.gov/system/files/ftc_gov/pdf/FTC15thAnnualMicroeconomicsConferenceDay1-November3-

2022.pdf, at 41-50. 
6 

retailers, and other companies that extend credit.21F

22 The guidance emphasized that creditors may 

not consider during the application process or when making a credit decision, among other 

things, consumers’ race or sex, including sexual orientation and gender identity (although they 

can ask consumers to voluntarily disclose this information, which assists federal agencies in 

enforcing anti-discrimination laws). The guidance also noted that consumers have the right to 

know within thirty days of filing a completed application whether it was accepted or rejected 

and, if rejected, the reason(s) why, and that they must disclose the federal agency (including the 

FTC, as applicable) to contact in the denial notice. 

The FTC released information for consumers noting that reports to the FTC, analysis of 

data from FTC enforcement actions, and research have shown that people living in majority 

Black communities are disproportionately harmed by fraud and other consumer problems.22F

23 The 

release noted that racial discrimination has led to structural barriers to accessing credit especially 

in Black communities, outlined initiatives in which the FTC is engaged to center racial equity 

and economic equality in its work, and also highlighted the FTC’s previously released Serving 

Communities of Color report. 

The FTC also issued alerts for consumers about the cases discussed above, providing 

guidance about the Napleton defendants’ alleged discriminatory lending and illegal junk fees, 

and the Passport defendants’ alleged unfair and discriminatory charges to Black and Latino 

consumers through junk fees and financing markups.23F

24 The FTC also provided businesses with 

guidance on these settlements, including on the importance of ensuring compliance with the 

ECOA and the FTC Act.24F

25 

We hope that the information discussed above responds to your inquiry and will be useful 

22 See Carol Kando-Pineda, Credit discrimination is illegal, FTC BUREAU OF CONSUMER PROTECTION ALERT (June 

15, 2022), https://consumer.ftc.gov/consumer-alerts/2022/06/credit-discrimination-illegal. 

23 See Rhonda Perkins, Advancing racial equity by addressing consumer issues affecting Black communities, FTC 

BUREAU OF CONSUMER PROTECTION ALERT (Feb. 10, 2022), https://consumer.ftc.gov/consumeralerts/2022/02/advancing-racial-equity-addressing-consumer-issues-affecting-black-communities. 

The FTC also updated its other consumer information on credit discrimination, clarifying what a creditor may not do 

during the credit application process (such as considering consumers’ race or sex, or sexual orientation and gender 

identity) and in evaluating consumers’ income (including discounting consumers’ income due to their sex or marital 

status, among other things). See Credit Discrimination (Jan. 2022), available at 

https://consumer.ftc.gov/articles/credit-discrimination. 

24 See Seena Gressin, Auto dealers to pay $10 million for discriminatory lending and sneaking in junk add-on fees,

FTC BUREAU OF CONSUMER PROTECTION ALERT (Apr. 1, 2022), https://consumer.ftc.gov/consumeralerts/2022/04/auto-dealers-pay-10-million-discriminatory-lending-and-sneaking-junk-add-fees, and Rosario 

Mendez, Discriminatory financing and bogus fees at the car dealer? No thank you, FTC BUREAU OF CONSUMER 

PROTECTION ALERT (Oct. 18, 2022), https://consumer.ftc.gov/consumer-alerts/2022/10/discriminatory-financingand-bogus-fees-car-dealer-no-thank-you, respectively. 

25 See Lesley Fair, Record-setting $10 million FTC-Illinois settlement takes on car dealers’ unauthorized add-ons 

and discriminatory lending practices, FTC BUSINESS BLOG (Apr. 4, 2022), https://www.ftc.gov/businessguidance/blog/2022/04/record-setting-10-million-ftc-illinois-settlement-takes-car-dealers-unauthorized-add-ons-and, 

and $3.3 million FTC settlement with Passport drives home importance of fair lending, FTC BUSINESS BLOG (Oct. 18, 

2022), https://www.ftc.gov/business-guidance/blog/2022/10/33-million-ftc-settlement-passport-drives-homeimportance-fair-lending, respectively. 
7

in preparing the CFPB’s Annual Report to Congress. Should you need additional assistance, 

please contact me at (202) 326-2972, or Carole Reynolds at (202) 326-3230.

Sincerely,

Malini Mithal

Associate Director

Division of Financial Practices