IN THE UNITED STATES DISTRICT COURT 

FOR THE NORTHERN DISTRICT OF ILLINOIS 

EASTERN DIVISION 

Bureau of Consumer Financial ) 

Protection, ) Case No. 1:20-cv-04176 

 ) 

 Plaintiff, ) 

 ) 

v. ) Judge Franklin U. Valderrama 

 ) Magistrate Judge Gabriel A. Fuentes 

 ) 

Townstone Financial, Inc. and Barry Sturner, ) 

 ) 

 Defendants. ) 

OPPOSITION TO MOTION TO DISMISS 

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TABLE OF CONTENTS 

INTRODUCTION ........................................................................................................................................ 1 

STANDARD OF REVIEW .......................................................................................................................... 1 

BACKGROUND ............................................................................................................................................. 2 

ARGUMENT ................................................................................................................................................... 5 

I. The Amended Complaint states claims under ECOA and Regulation B. ...................... 5 

A. Regulation B’s longstanding discouragement prohibition is authorized by and 

necessary to ECOA. .................................................................................................................. 6 

B. Courts have consistently recognized Regulation B’s discouragement prohibition, 

including its application to prospective applicants. ............................................................. 8 

C. The Amended Complaint alleges sufficient facts to state a claim under ECOA and 

Regulation B. ............................................................................................................................ 11 

II. Neither Regulation B nor this action violates the First Amendment. ....................... 15 

A. This action does not implicate speech protected by the First Amendment. ............ 16 

B. Even if the challenged communications are protected speech, they are commercial 

speech appropriately subject to regulation here. ................................................................. 19 

1. Commercial speech mixed with discussion of public issues remains commercial 

speech. .................................................................................................................................. 19 

2. The Bureau’s regulation of Townstone’s commercial speech directly advances 

the Bureau’s substantial interest in prohibiting discriminatory lending. ..................... 21 

C. Neither this action nor Regulation B is unconstitutionally vague. ............................ 23 

III. ECOA and Regulation B provide fair notice of the prohibited conduct and comport 

with the Fifth Amendment. ....................................................................................................... 25 

IV. The fraudulent-transfer claim should not be dismissed. ............................................ 27 

CONCLUSION ............................................................................................................................................. 27 

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TABLE OF AUTHORITIES 

Page(s)

Cases

Alexander v. AmeriPro Funding, Inc., 

848 F.3d 698 (5th Cir. 2017) ......................................................................................................................... 9 

Page v. Midland Fed. Sav. & Loan, 

 2013 WL 5211747 (N.D. Ill. Sept. 13, 2013) ........................................................................................... 10 

Ashcroft v. Iqbal, 

556 U.S. 662 (2009) ........................................................................................................................................ 2 

Bell Atl. Corp. v. Twombly, 

550 U.S. 544 (2007) ........................................................................................................................................ 2 

Bolger v. Youngs Drug Prod. Corp., 

463 U.S. 60 (1983) ........................................................................................................................... 16, 19, 20 

Burns v. McGregor Elec. Indus., Inc., 

989 F.2d 959 (8th Cir. 1993) ...................................................................................................................... 26 

Campbell v. Robb, 

162 F. Appx. 460 (6th Cir. 2006) .............................................................................................................. 20 

Cartwright v. Am. Sav. & Loan Ass’n, 

880 F.2d 912 (7th Cir. 1989) ...................................................................................................................... 12 

Cent. Hudson Gas & Elec. Corp. v. Pub. Serv. Comm’n, 

447 U.S. 557 (1980). ................................................................................................................. 19, 21, 23, 24 

CFTC v. Schor, 

478 U.S. 833 (1986) ........................................................................................................................................ 4 

Cherry v. Amoco Oil Co., 

481 F. Supp. 727 (N.D. Ga. 1979) ............................................................................................................ 13 

Chevron v. NRDC, 

467 U.S. 837 (1984) ................................................................................................................................... 6, 8 

City of Sacramento v. Wells Fargo & Co., 

2019 WL 3975590 (E.D. Cal. 2019) ......................................................................................................... 16 

Davis v. Strata Corp., 

242 F. Supp. 2d 643 (D.N.D. 2003) ......................................................................................................... 13 

Dhade v. Huntington Learning Ctrs., Inc., 

 414 F. Supp. 3d 703 (D. Del. 2019) ...................................................................................................... 9, 10 

EEOC v. O & G Spring & Wire Forms Specialty Co., 

38 F.3d 872 (7th Cir. 1994) ........................................................................................................................ 15 

Estate of Davis v. Wells Fargo Bank, 

633 F.3d 529 (7th Cir. 2011) ...................................................................................................................... 12 

FCC v. Fox Television Stations, Inc., 

 567 U.S. 239 (2012) ..................................................................................................................................... 28 

First Merit Bank, N.A. v. Ferrari, 

71 F.Supp.3d 751 (N.D. Ill. 2014) ............................................................................................................ 12 

Ford Motor Credit Co. v. Milhollin, 

444 U.S. 555 (1980) ........................................................................................................................................ 3 

Freedom v. Madigan, 

697 F.3d 464 (7th Cir. 2012) ................................................................................................................ 25, 27 

Case: 1:20-cv-04176 Document #: 35 Filed: 03/15/21 Page 3 of 34 PageID #:221
iii 

FTC v. Trudeau, 

662 F.3d 947 (7th Cir. 2011) ................................................................................................................ 22, 23 

Hallinan v. Fraternal Order of Police of Chi. Lodge No. 7, 

570 F.3d 811 (7th Cir. 2009) ......................................................................................................................... 1 

Harbaugh v. Cont’l Ill. Nat’l Bank & Tr. Co. of Chi., 

615 F.2d 1169 (7th Cir. 1980)....................................................................................................................... 9 

Hazelwood Sch. Dist. v. United States, 

433 U.S. 299 (1977) ..................................................................................................................................... 15 

Hill v. Colorado, 

530 U.S. 703 (2000) ..................................................................................................................................... 27 

Hood v. Midwest Sav. Bank, 

95 F. App’x 768 (6th Cir. 2004) ................................................................................................................ 13 

Household Credit Servs., Inc. v. Pfennig, 

541 U.S. 232 (2004) ........................................................................................................................................ 3 

Int’l Bd. of Teamsters v. United States, 

431 U.S. 324 (1977) ........................................................................................................................... 7, 12, 15 

Jancik v. HUD, 

44 F.3d 553 (7th Cir. 1995) ........................................................................................................................ 26 

Jordan v. Jewel Food Stores, Inc., 

743 F.3d 509 (2014) ........................................................................................................................ 17, 21, 22 

Lewis v. ACB Bus. Servs., Inc., 

135 F.3d 389 (6th Cir. 1998) ...................................................................................................................... 12 

Mourning v. Fam. Publ’ns Serv., Inc., 

411 U.S. 356 (1973) ........................................................................................................................................ 7 

Muro v. Target Corp., 

580 F.3d 485 (7th Cir. 2009) ......................................................................................................................... 7 

Nat’l Inst. of Family & Life Advocates v. Becerra, 

138 S. Ct. 2361 (2018) ................................................................................................................................ 18 

NLRB v. Bell Aerospace Co., 

416 U.S. 267 (1974) ........................................................................................................................................ 4 

Oncale v. Sundowner Offshore Servs., Inc., 

523 U.S. 75 (1998) ....................................................................................................................................... 26 

Ortiz v. Werner Enters., Inc., 

834 F.3d 760 (7th Cir. 2016) ...................................................................................................................... 12 

Pittsburgh Press Co. v. Pittsburgh Comm’n on Hum. Rels., 

 413 U.S. 376 (1973) ............................................................................................................................... 19, 20 

Ragin v. NY Times, 

923 F.2d 995 (2d Cir. 1991) .................................................................................................... 20, 25, 26, 28 

RAV v. City of St. Paul, 

505 U.S. 377 (1992) ..................................................................................................................................... 18 

RL BB Acquisition, LLC v. Bridgemill Commons Dev. Grp., LLC, 

754 F.3d 380 (6th Cir. 2014) ......................................................................................................................... 8 

Rosa v. Park W. Bank & Trust Co., 

214 F.3d 213 (1st Cir. 2000) ...................................................................................................................... 12 

Rumsfeld v. F.A.I.R., 

547 U.S. 47 (2006) ........................................................................................................................... 17, 18, 20 

Schor v. Daley, 

563 F. Supp. 2d 893 (N.D. Ill. 2008) ........................................................................................................ 27 

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iv 

Sims v. New Penn Fin. LLC, 

2018 WL 1523212 (N.D. Ind. 2018) ........................................................................................................ 11 

Sorrell v. IMS Health Inc., 

564 U.S. 552 (2011) ............................................................................................................................... 18, 20 

Sullivan-Knoff v. City of Chicago, 

348 F. Supp. 3d 787 (N.D. Ill. 2018) ........................................................................................................ 27 

Swierkiewicz v. Sorema, 

534 U.S. 506 (2002) ..................................................................................................................................... 12 

Thomas v. First Fed. Sav. Bank of Ind., 

653 F. Supp. 1330 (N.D. Ind. 1987) ......................................................................................................... 12 

Treadway v. Gateway Chevrolet Oldsmobile, 

362 F.3d 971 (7th Cir. 2004) ......................................................................................................................... 9 

United States. v. BancorpSouth Bank, 

 No. 1:16-cv-00118 (N.D. Miss. June 29, 2016) ...................................................................................... 15 

United States. v. Bell, 

414 F.3d 474 (3d Cir. 2005) ....................................................................................................................... 22 

United States. v. Blackpipe State Bank, 

 No. 93-5115 (D.S.D. 1993) ........................................................................................................................ 15 

United States. v. Chevy Chase Fed. Sav. Bank, 

 No. 1:94-cv-01829, (D.D.C. Aug. 22, 1994) ........................................................................................... 15 

United States. v. Decatur Fed. Sav. & Loan Assoc., 

 No. 1:92-cv-02198 (N.D. Ga. Mar. 17, 1992) ......................................................................................... 15 

United States ex rel. Jackson v. Racey, 

112 F.3d 512 (4th Cir. May 7, 1997) ......................................................................................................... 20 

United States v. First Am. Bank, 

 No. 04C-4585 (N.D. Ill. July 13, 2004) ....................................................................................................... 8 

United States v. First Merchants Bank, 

 No. 1:19-cv-02365 (S.D. Ind. June 13, 2019) ............................................................................................. 8 

United States v. First Secs. Bank, 

 No. 09-0644 (S.D. Ala. Sept. 30, 2009) .................................................................................................... 14 

United States v. Hudson City Savs. Bank, F.S.B., 

 No. 2:15-cv-07056 (D. N.J. Sept. 24, 2015) ........................................................................................ 8, 15 

United States v. Hunter, 

459 F.2d 205 (4th Cir. 1972) ...................................................................................................................... 20 

United States v. KleinBank, 

 No. 0:17-cv-00136 (D. Minn. Jan. 30, 2018) .............................................................................................. 8 

United States v. Mead Corp., 

533 U.S. 218 (2001) ................................................................................................................................... 6, 8 

United States v. Space Hunters, Inc., 

 429 F.3d 416 (2d Cir. 2005) ....................................................................................................................... 18 

United States v. Union Auto Sales, Inc., 

490 F. App’x 847 (9th Cir. 2012) .............................................................................................................. 12 

United States v. Williams, 

553 U.S. 285 (2008) ..................................................................................................................................... 20 

Vill. of Arlington Heights v. Metro. Haus. Dev. Corp., 

 429 U.S. 252 (1977) ..................................................................................................................................... 12 

Volling v. Kurtz Paramedic Servs., Inc., 

840 F.3d 378 (7th Cir. 2016) ......................................................................................................................... 7 

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Wis. Right to Life, Inc. v. Barland, 

751 F.3d 804 (7th Cir. 2014) ...................................................................................................................... 25 

Statutes 

5 U.S.C. § 706(2)(A)-(C) .................................................................................................................................... 6 

12 U.S.C. § 5519 ................................................................................................................................................. 4 

15 U.S.C. § 1604(a) ............................................................................................................................................ 6 

15 U.S.C. § 1691 ............................................................................................................................................ 1, 2 

15 U.S.C. § 1691a .......................................................................................................................................... 3, 8 

15 U.S.C. § 1691b .................................................................................................................................. 3, 4, 6, 7 

15 U.S.C. § 1691e .......................................................................................................................................... 4, 9 

28 U.S.C. §§ 3301–3308 ................................................................................................................................. 29 

42 U.S.C. § 3604(c) ......................................................................................................................................... 20 

Pub. L. No. 90-321 ............................................................................................................................................ 6 

Pub. L. No. 93-495 ............................................................................................................................. 2, 6, 7, 18 

Pub. L. No. 94-239 ....................................................................................................................................... 2, 4 

Pub. L. No. 102-242 .......................................................................................................................................... 4 

Pub. L. No. 111-203 ..................................................................................................................................... 3, 4 

Rules 

Fed. R. Civ. P. 8(a)(2) ........................................................................................................................................ 2 

Regulations 

12 C.F.R. pt. 202 ........................................................................................................................................... 3, 8 

12 C.F.R. pt. 1002 & Supp. I ........................................................................................................ 4, 18, 19, 20 

12 C.F.R. § 1002.4(b) .............................................................................................................................. 1, 4, 15 

40 Fed. Reg. 49,298 (Oct. 22, 1975) ........................................................................................................... 3, 8 

42 Fed. Reg. 1254 (Jan. 6, 1977) ...................................................................................................................... 3 

50 Fed. Reg. 48,050 (Nov. 12, 1985) ........................................................................................................ 3, 20 

76 Fed. Reg. 79,442 (Dec. 21, 2011) ............................................................................................................... 4 

Other Authorities 

Federal Financial Institutions Examination Council, “Interagency Fair Lending Examination 

Procedures,” (September 2009) at ii, iv, available at https://www.ffiec.gov/PDF/fairlend.pdf...........8 

H.R. Rep. No. 102-330 ..................................................................................................................................... 5 

S. Rep. No. 102-167 ........................................................................................................................................... 5 

S. Rep. No. 93-278 ................................................................................................................................ 2, 17, 22 

S. Rep. No. 94-589 ...................................................................................................................................... 2, 22 

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INTRODUCTION

The Equal Credit Opportunity Act (ECOA or the Act), enacted in 1974, prohibits 

discrimination in any aspect of a credit transaction.1 ECOA’s implementing regulation, Regulation B, 

prohibits creditors from making “any oral or written statement, in advertising or otherwise, to 

applicants or prospective applicants that would discourage on a prohibited basis a reasonable person 

from making or pursuing an application.”2 ECOA and Regulation B have been protecting 

consumers from credit discrimination for more than 45 years. The Bureau’s claims present a 

straightforward application of these laws. 

Townstone Financial, Inc. (Townstone), a mortgage-loan creditor, has for years engaged in 

unlawful discrimination by engaging in acts or practices that would discourage prospective 

applicants, on the basis of race, from applying for credit in the Chicago Metropolitan Statistical Area 

(MSA), in violation of ECOA and Regulation B. After litigation became likely, Townstone 

transferred more than $2.4 million to Barry Sturner, which, if allowed to stand, would thwart the 

Bureau’s collection on any judgment. 

The law provides no respite for Townstone’s discrimination, and Townstone and Barry 

Sturner cannot prevent the Bureau’s collection on any favorable judgment in this case by 

fraudulently transferring Townstone’s assets. The Amended Complaint adequately alleges claims for 

relief, and Defendants’ motion to dismiss should be denied. 

 

STANDARD OF REVIEW

A motion to dismiss under Rule 12(b)(6) challenges the complaint’s sufficiency.3

 Under Rule 

8(a)(2), a complaint must include only “a short and plain statement of the claim showing that the 

1 15 U.S.C. § 1691(a). 2 12 C.F.R. § 1002.4(b). 3 Hallinan v. Fraternal Order of Police of Chi. Lodge No. 7, 570 F.3d 811, 820 (7th Cir. 2009). 

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pleader is entitled to relief.”4 To survive a motion to dismiss, a complaint need only contain factual 

allegations, accepted as true, sufficient to “‘state a claim to relief that is plausible on its face.’”5 “A 

claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the 

reasonable inference that the defendant is liable for the misconduct alleged.”6 The allegations “must 

be enough to raise a right to relief above the speculative level.”7 Factual allegations are entitled to the 

assumption of truth.8 

 

BACKGROUND

ECOA is a landmark civil-rights law that protects individuals and businesses against 

discrimination in accessing and using credit—“a virtual necessity of life” for most Americans.9

Congress enacted ECOA in 1974, initially to address “widespread discrimination . . . in the granting 

of credit to women.”10 Two years later, Congress added race, color, religion, and national origin, 

among others, to the list of prohibited bases.11 From the beginning, the Act has made it unlawful for 

“any creditor to discriminate against any applicant, with respect to any aspect of a credit 

transaction,” on a prohibited basis.12 

Congress directed the Board of Governors of the Federal Reserve System (Board) to 

prescribe regulations to implement ECOA and gave the Board broad authority in doing so: 

The Board shall prescribe regulations to carry out the purposes of this title. These 

regulations may contain but are not limited to such classifications, differentiation, or 

other provision, and may provide for such adjustments and exceptions for any class 

of transactions, as in the judgment of the Board are necessary or proper to effectuate the 

4 Fed. R. Civ. P. 8(a)(2). 5 Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). 6 Id. (citing Twombly, 550 U.S. at 556). 7 Twombly, 550 U.S. at 555. 8 Iqbal, 556 U.S. at 678–79. 9 S. Rep. No. 94-589, at 3–4 (1976). 10 S. Rep. No. 93-278, at 16 (1973), Equal Credit Opportunity Act of 1974, Pub. L. No. 93-495, 88 Stat. 1500, 

1521 (1974). 11 Equal Credit Opportunity Amendments Act of 1976, Pub. L. No. 94-239, 90 Stat. 251 (1976). 12 15 U.S.C. § 1691. 

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purposes of this subchapter, to prevent circumvention or evasion thereof, or to facilitate or 

substantiate compliance therewith.

13

Congress made clear that the requirements of these regulations would bind creditors to the same 

extent as the statute itself.14 

Using notice-and-comment rulemaking, the Board issued these rules, known as Regulation 

B, in 1975, the year after ECOA was enacted and several days before the statute took effect.15 These 

rules provided that “[a] creditor shall not make any statements to applicants or prospective 

applicants which would, [on a prohibited basis], discourage a reasonable person from applying for 

credit or pursuing an application for credit.”16 The Board described the provision as “necessary to 

protect applicants against discriminatory acts occurring before an application is initiated.”17 The 

Board updated this provision to encompass the broader prohibited bases mandated by the 1976 

ECOA amendments,18 including race, color, and national origin, and to add specificity and 

commentary.19 

The Dodd-Frank Wall Street Reform and Consumer Protection Act, enacted in 2010, 

established the Bureau and transferred to it primary rulemaking responsibility under ECOA.20

13 15 U.S.C. § 1691b(a) (emphasis added). This broad statutory charge is identical to language in the Truth in 

Lending Act (TILA), which the Supreme Court has characterized as providing “expansive authority to the 

[Board] to enact appropriate regulations,” Household Credit Servs., Inc. v. Pfennig, 541 U.S. 232, 235 (2004), and 

as indicating that Congress “specifically designated the [Board] as the primary source for interpretation and 

application of [the] law,” Ford Motor Credit Co. v. Milhollin, 444 U.S. 555, 566 (1980). 14 See 15 USC 1691a(g). 15 See 40 Fed. Reg. 49,298 (Oct. 22, 1975) (promulgating 12 C.F.R. pt. 202). 

16 Id. at 49,307. 

17 40 Fed. Reg. 49,298, 49,307 (Oct. 22, 1975). 18 42 Fed. Reg. 1254 (Jan. 6, 1977). 

19 50 Fed. Reg. 48,050 (Nov. 12, 1985) (adding official commentary to the discouragement prohibition and 

stating, “Generally, the regulation’s protections apply only to persons who have requested or received an 

extension of credit. In keeping with the purpose of the act—to promote the availability of credit on a 

nondiscriminatory basis–§ 202.5(a) covers acts or practices directed at potential applicants.”). 

20 Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203, 124 Stat. 1376, 2083–

84 (2010). 

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Shortly thereafter, the Bureau republished the Board’s ECOA regulations without material change.21

Accordingly, through Congress’s express delegation of rulemaking authority, Regulation B’s 

discouragement provision has been effectuating “the purposes of” ECOA and preventing 

“circumvention or evasion thereof” since 1975. At all times relevant here, it has prohibited creditors 

from making “any oral or written statement, in advertising or otherwise, to applicants or prospective 

applicants that would discourage on a prohibited basis a reasonable person from making or pursuing 

an application.”22 This provision is the basis for the Bureau’s claims against Townstone. 

It is true today—as it was in 1975—that a prohibition on discouragement is necessary to 

implement ECOA and prevent evasion.In the 45 years since the Board issued Regulation B, 

Congress has revisited ECOA on several occasions, yet Congress has never displaced or altered the 

regulation’s discouragement provision.23 “It is well established that when Congress revisits a statute 

giving rise to a longstanding administrative interpretation without pertinent change, the 

‘congressional failure to revise or repeal the agency’s interpretation is persuasive evidence that the 

interpretation is the one intended by Congress.’”24 Here, not only has Congress acted without 

altering Regulation B’s discouragement provision, but Congress also specifically recognized the 

provision in its 1991 amendment of ECOA, requiring that agencies enforcing the Act refer to the 

Attorney General any matter involving a suspected “pattern or practice of discouraging or denying 

applications for credit in violation of [ECOA].”25 Thus, Congress recognized that discriminatory 

21 See 76 Fed. Reg. 79,442 (Dec. 21, 2011) (promulgating 12 C.F.R. pt. 1002 & Supp. I). The Board retains the 

authority to prescribe rules under ECOA with respect to auto dealers excluded from the Bureau’s authority 

by 12 U.S.C. § 5519. See 15 U.S.C. § 1691b(f). 22 12 C.F.R. § 1002.4(b). 23 E.g., Equal Credit Opportunity Amendments Act of 1976, Pub. L. No. 94-239, 90 Stat. 251 (1976); FDIC 

Improvement Act of 1991, Pub. L. No. 102-242, 105 Stat 2236 (1991); Dodd-Frank Wall Street Reform and 

Consumer Protection Act of 2010, Pub. L. No. 111-203, 124 Stat. 1376, 1980, 2083 (2010). 24 CFTC v. Schor, 478 U.S. 833, 846 (1986) (quoting NLRB v. Bell Aerospace Co., 416 U.S. 267, 274–75 (1974)). 

25 FDIC Improvement Act of 1991, Pub. L. 102-242, 105 Stat 2236 (1991), codified at 15 U.S.C. § 1691e(g)

(emphasis added). 

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discouragement of applications for credit is a violation of ECOA and directed that it must be 

addressed to effectively enforce the Act.26

ARGUMENT 

Townstone asserts that the Bureau’s claims improperly expand ECOA’s reach contrary to its 

express language. Townstone further argues that the Bureau’s claims must be dismissed because they 

seek to regulate the content and viewpoint of speech protected by the First Amendment and 

because Regulation B’s reasonable-person standard is unconstitutionally vague under the Fifth 

Amendment’s Due Process Clause. Townstone’s arguments are unavailing. Regulation B’s 

prohibition on discouragement of prospective applicants is entirely consistent with, not contrary to, 

ECOA’s express language, which refers to “discouraging . . . applications for credit”;27 Townstone’s 

commercial speech in violation of ECOA is not protected by the First Amendment; and Regulation 

B provides fair notice of the conduct that it proscribes. 

I. The Amended Complaint states claims under ECOA and Regulation B. 

Townstone argues that Regulation B’s discouragement provision exceeds ECOA’s scope. 

Townstone asserts that ECOA’s prohibition is limited to “applicants,” such that inclusion of 

“prospective applicants” in Regulation B improperly expands ECOA. Similarly, Townstone asserts 

that “discouragement” is not reasonably within the unambiguous “discrimination” prohibited by 

ECOA. Asserting that there is no ambiguity in ECOA’s language, Townstone argues that Regulation 

B should receive no deference and further argues that Regulation B is not a reasonable interpretation 

26 See H.R. Rep. 102-330, 131, 1991 U.S.C.C.A.N. 1901, 1944 (“Regulators will be required by this section to 

promptly refer loan discrimination violations of the Equal Credit Opportunity Act to the Justice 

Department.”); S. Rep. 102-167, at *86, 93 (Oct. 1, 1991) (citing ECOA regulations “[d]iscouraging 

applications on a prohibited basis and advertising which implies a discriminatory preference are also 

prohibited”). 

27 15 U.S.C. § 1691e(g). 

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of ECOA because “prospective applicants” is vague and arguably includes “the entire world.” But 

contrary to Townstone’s assertions, Regulation B’s discouragement provision is a valid regulation, 

entirely consistent with ECOA’s express language, and necessary to achieve ECOA’s stated purpose 

of prohibiting discrimination in any aspect of a credit transaction. 

A. Regulation B’s longstanding discouragement prohibition is authorized by and 

necessary to ECOA. 

Under the Administrative Procedure Act (APA), a court may set aside a rule only if it is 

“arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law,” “contrary to 

constitutional right,” or “in excess of statutory jurisdiction, authority, or limitations.”28 Where 

Congress provides “‘an express delegation of authority to [an] agency to elucidate a specific 

provision of [a] statute by regulation,’” as it did in ECOA, the agency’s implementing regulations are 

“binding in the courts unless procedurally defective, arbitrary or capricious in substance, or 

manifestly contrary to the statute.”29

Regulation B’s discouragement prohibition is not manifestly contrary to ECOA, but rather 

fulfills the Act’s express mandate to the Bureau, and to the Board before it, “to prevent 

circumvention or evasion thereof, or to facilitate . . . compliance therewith.”30 Congress understood 

that additional rules may be necessary to prevent evasion of ECOA’s prohibitions and expressly 

instructed the Board, then the Bureau, to enact any such rules. The language delegating this authority 

is unambiguous. In examining an identical anti-evasion provision in the Truth in Lending Act 

(TILA),31 the Supreme Court held that 

[t]he language employed evinces the awareness of Congress that some creditors 

would attempt to characterize their transactions so as to fall one step outside 

28 5 U.S.C. § 706(2)(A)-(C). 29 United States v. Mead Corp., 533 U.S. 218, 227 (2001) (quoting Chevron v. NRDC, 467 U.S. 837, 843–44 

(1984)). 

30 15 U.S.C. § 1691b(a); Pub. L. No. 93-495, 88 Stat. 1522. 31 Consumer Credit Protection Act, Pub. L. No. 90-321, 82 Stat. 146 (1968), codified at 15 U.S.C. § 1604(a). 

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7 

whatever boundary Congress attempted to establish. It indicates as well the clear 

desire of Congress to insure that the Board had adequate power to deal with such 

attempted evasion. In addition to granting to the Board the authority normally given 

to administrative agencies to promulgate regulations designed to ‘carry out the 

purposes’ of the Act, Congress specifically provided, as noted earlier, that the 

regulations may define classifications and exceptions to insure compliance with the 

Act. 32

And the Seventh Circuit has likewise held that rules necessary to render TILA effective must be 

sustained so long as they are reasonably related to the legislation’s purposes.33

The same analysis leads to the same conclusion here. ECOA’s delegation of rulemaking 

authority plainly permits the Bureau to deal with attempted evasion and authorizes the Bureau to 

promulgate a rule like the discouragement prohibition of Regulation B.34 Regulation B carries out 

ECOA’s purpose by making clear that creditors cannot evade the statute’s prohibition on 

discrimination in lending by discouraging applications—in effect, telling prospective applicants that, 

because of some protected characteristic, they need not apply.35 As a lawful rulemaking, Regulation 

B is not “in excess of statutory jurisdiction” or in violation of the APA. 

ECOA has never operated without the discouragement provision, nor would it be effective 

without it. When the Board first issued Regulation B in 1975, it recognized that the statute cannot 

prevent discrimination in any aspect of a credit transaction without prohibiting discrimination 

against prospective applicants.36 As such, the discouragement prohibition is based on the 

straightforward premise that turning away a prospective applicant may be just as pernicious a vehicle 

32 Mourning v. Fam. Publ’ns Serv., Inc., 411 U.S. 356, 365–66 (1973) (upholding the Board’s authority to require 

disclosures in circumstances beyond those specified in the TILA based on delegated authority to prevent 

evasion). 

33 Muro v. Target Corp., 580 F.3d 485 n.9 (7th Cir. 2009). 34 15 U.S.C. § 1691b(a); Pub. L. No. 93-495, 88 Stat. 1522. 35 Cf. Volling v. Kurtz Paramedic Servs., Inc., 840 F.3d 378, 383–84 (7th Cir. 2016) (recognizing that “a 

prospective employee” who was deterred or prevented from applying for a position “suffers an adverse 

employment action despite not applying” and that to hold otherwise would “effectively bar ‘victims of the 

most entrenched forms of discrimination’ from Title VII relief’”) (quoting Int’l Bd. of Teamsters v. United States, 

431 U.S. 324, 367 (1977)). 

36 40 Fed. Reg. 49,298, 49,299 (Oct. 22, 1975) (promulgating 12 C.F.R. pt. 202). 

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for credit discrimination as denying an application later on. Indeed, this premise was recognized by 

Congress in its 1991 amendment to ECOA, which made clear that discouraging applications is a 

violation distinct from denying applications.37 If ECOA were construed to allow disparagement of 

people of a certain race or gender in marketing, suggesting to certain prospective applicants (on a 

prohibited basis) that they should not apply for credit, the law would be powerless to prevent and 

remedy credit discrimination—its core functions. Regulation B’s prohibition against discouragement 

for both applicants and prospective applicants was promulgated to prevent this circumvention or 

evasion, and it has been reasonably and practically applied for decades in regulatory enforcement,38

as well as supervision and examination of financial institutions.39 Regulation B’s discouragement 

prohibition is both consistent with and necessary to fulfilling ECOA’s anti-discrimination aims. 

Because Regulation B’s discouragement provision is not “procedurally defective, arbitrary or 

capricious in substance, or manifestly contrary to”40 ECOA, the provision is valid and binding.41

B. Courts have consistently recognized Regulation B’s discouragement 

prohibition, including its application to prospective applicants. 

To support its assertion that Regulation B’s use of “prospective applicants” exceeds the 

scope of ECOA, Townstone relies on several cases analyzing whether a “guarantor” is within the 

37 FDIC Improvement Act of 1991, Pub. L. 102-242, § 223, 105 Stat 2236 (1991), codified at 15 U.S.C. 

§ 1691e(g) (requiring that agencies enforcing the Act refer to the Attorney General any matter involving a 

suspected “pattern or practice of discouraging or denying applications for credit in violation of [ECOA]” 

(emphasis added)). 

38 See, e.g., Compl., United States v. First Merchs. Bank, No. 1:19-cv-02365 (S.D. Ind. June 13, 2019); United States 

v. KleinBank, No. 0:17-cv-00136, ECF No. 93, at 10–11 (D. Minn. Jan. 30, 2018); Compl., CFPB v. Hudson City 

Sav. Bank, F.S.B., No. 2:15-cv-07056 (D. N.J. Sept. 24, 2015); Compl., United States v. First Am. Bank, No. 

1:04-cv-04585 (N.D. Ill. July 13, 2004). 39 Federal Financial Institutions Examination Council, “Interagency Fair Lending Examination Procedures,” 

(September 2009) at ii, iv, available at https://www.ffiec.gov/PDF/fairlend.pdf (noting that bank examiners 

use procedures that “are intended to be a basic and flexible framework to be used in the majority of fair 

lending examinations conducted by the FFIEC agencies,” including the prohibitions on discouragement of 

and discrimination against prospective applicants). 

40 United States v. Mead Corp., 533 U.S. at 227 (quoting Chevron v. NRDC, 467 U.S. at 843–44 (1984)). 

41 See RL BB Acquisition, LLC v. Bridgemill Commons Dev. Grp., LLC, 754 F.3d 380, 386–87 (6th Cir. 2014) (“A 

creditor who violates Regulation B necessarily violates ECOA itself.”) (citing 15 U.S.C. 1691a(g)). 

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definition of “applicant” for purposes of bringing a private action under ECOA. Townstone argues 

that these cases demonstrate that ECOA’s reach is limited to conduct involving those who meet the 

definition of “applicant.” But the cases that Townstone cites do not support that argument. And the 

Bureau’s authority to prohibit Townstone’s discouragement of “prospective applicants” does not 

require interpreting the statutory definition of “applicant” to encompass “prospective applicants.” 

The definition of “applicant” is not at issue here, nor is the question of whether a private right of 

action exists, and the cases on which Townstone relies are therefore irrelevant. 

Regulation B’s prohibition on discouragement, including its application to “prospective 

applicants,” is consistent with and necessary to prevent evasion of ECOA, and it is plainly within the 

scope of the Bureau’s rulemaking mandate under the Act. Courts have recognized this, 

acknowledging the discouragement provision and treating it as presumptively valid.42 In Alexander v. 

AmeriPro Funding, Inc., the Fifth Circuit observed that “[d]iscouragement of a ‘prospective applicant’ 

may be regulatorily prohibited” even if the discouragement provision “does not alter the definition 

of ‘applicant’” to allow a private action under ECOA.43 Similarly, in Dhade v. Huntington Learning 

Centers, Inc., the court declined to extend ECOA’s private right of action to a prospective applicant, 

concluding that Regulation B’s discouragement provision “does not change the definition of 

‘applicant,’ let alone expand the definition to include ‘prospective applicant.’”44 The court noted that 

“the CFPB draws a distinction between ‘applicants’ and ‘prospective applicants’” in Regulation B’s 

discouragement provision, stating that “ECOA vested the CFPB with enforcement powers that are 

42 See, e.g., Treadway v. Gateway Chevrolet Oldsmobile, 362 F.3d 971, 979–80 (7th Cir. 2004) (acknowledging that 

where a person meets the definition of a creditor as someone who “regularly refers applicants to lenders,” 

that person must comply with Regulation B’s discouragement provision); Harbaugh v. Cont’l Ill. Nat’l Bank & 

Tr. Co. of Chi., 615 F.2d 1169, 1174 (7th Cir. 1980) (noting that if the defendant had made an inquiry 

implicating gender, it would have risked a claim brought under Regulation B’s discouragement provision). 

43 Alexander v. AmeriPro Funding, Inc., 848 F.3d 698, 708 (5th Cir. 2017) (holding that prospective applicants do 

not have a private right of action under 15 U.S.C. § 1691e(a)). 

44 Dhade v. Huntington Learning Ctrs., Inc., 414 F. Supp. 3d 703, 707 (D. Del. 2019). 

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more expansive than the private right of action authorized by [ECOA],” and “[t]hus, it makes sense 

that the CFPB would promulgate regulations that extend to parties not covered by the ECOA’s 

private right of action,”45 specifically, prospective applicants. And in Page v. Midland Federal Savings 

and Loan, Judge Gettleman cited Regulation B’s discouragement provision and expressly noted that 

“ECOA applies to all stages of a credit transaction, including the pre-application stage.”46 

Townstone argues that conduct affecting prospective applicants is not regulated by ECOA. 

But courts recognize the authority of regulators like the Bureau to enforce Regulation B’s 

discouragement provision, including as to prospective applicants. And courts recognizing the 

discouragement provision’s validity have been direct in stating that its coverage of prospective 

applicants is independent of the statute’s definition of “applicants,” which governs who can bring 

private causes of action. Townstone’s statement that “courts in this district routinely require an 

actual application as a prerequisite to stating an ECOA claim”47 refers only to courts analyzing 

claims by private plaintiffs. But a private plaintiff’s ability to satisfy the definition of “applicant” has 

no bearing on the Bureau’s authority to enforce ECOA and Regulation B’s prohibitions. Nor do 

these cases even purport to address the Bureau’s rulemaking authority to prohibit discriminatory 

conduct that would discourage prospective applicants from seeking credit. Here, the Amended 

Complaint need only allege enough facts from which the Court may reasonably infer that 

Townstone engaged in acts or practices that would discourage, on the basis of race, prospective 

applicants for credit. Having done so, the Bureau has adequately stated a claim for illegal 

discouragement in violation of Regulation B and ECOA. 

45 Id.

46 No. 12 C 8261, Page v. Midland Fed. Savs. & Loan, 2013 WL 5211747, at *5 (N.D. Ill. Sept. 13, 2013). 47 Townstone Mem. Supp. Mot. to Dismiss 7, ECF No. 32 (Townstone Mem.). 

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C. The Amended Complaint alleges sufficient facts to state a claim under ECOA 

and Regulation B. 

The Amended Complaint follows a consistent and longstanding approach to pleading and 

proving illegal discrimination, including redlining,48 and does not create new rules or expand ECOA.49

Courts evaluating ECOA disparate-treatment claims often look to analogous Title VII employment 

discrimination and Fair Housing Act (FHA) case law.50 Under each of these statutes, direct and 

circumstantial evidence of discrimination and of an intent to discriminate have long been recognized 

as supporting claims of illegal discriminatory treatment.51 And that evidence of discrimination—both 

direct and circumstantial—must not be evaluated in isolation: “Evidence must be considered as a 

whole, rather than asking whether any particular piece of evidence proves the case by itself—or 

whether just the ‘direct’ evidence does so, or the ‘indirect’ evidence.”52 Considered as a whole, the 

Amended Complaint’s allegations support a plausible claim that Townstone discouraged prospective 

applicants, on the basis of race, from seeking credit in the Chicago MSA, in violation of ECOA and 

Regulation B.53

48 “‘Redlining’ means ‘mortgage credit discrimination based on the characteristics of the neighborhood 

surrounding the would-be borrower’s dwelling.’” Cartwright v. Am. Sav. & Loan Ass’n, 880 F.2d 912, 923 (7th 

Cir. 1989) (citing Thomas v. First Fed. Sav. Bank of Ind., 653 F. Supp. 1330, 1337 (N.D. Ind. 1987)). 

49 Townstone Mem. at 9. 

50 See, e.g., Lewis v. ACB Bus. Servs., Inc., 135 F.3d 389, 406 (6th Cir. 1998) (recognizing the relevance of 

“judicial constructions of anti-discrimination legislation in the employment field” to determining an ECOA 

violation); Rosa v. Park W. Bank & Trust Co., 214 F.3d 213, 215 (1st Cir. 2000) (“In interpreting ECOA, this 

court looks to Title VII case law.”); First Merit Bank, N.A. v. Ferrari, 71 F.Supp.3d 751 (N.D. Ill. 2014)

(treating discrimination claims under the FHA, ECOA, or other civil-rights statutes similarly for pleading 

purposes). 

51 See Intl. Bhd. of Teamsters v. United States, 431 U.S. 324, 335 n.15 (1977) (“Proof of discriminatory motive is 

critical, although it can in some situations be inferred from the mere fact of differences in treatment.”) (Title 

VII); Vill. of Arlington Heights v. Metro. Haus. Dev. Corp., 429 U.S. 252, 266 (1977) (“Determining whether 

invidious discriminatory purpose was a motivating factor demands a sensitive inquiry into such circumstantial 

and direct evidence of intent as may be available.”) (FHA); Estate of Davis v. Wells Fargo Bank, 633 F.3d 529, 

539 (7th Cir. 2011) (requiring “direct and/or circumstantial evidence sufficient to demonstrate defendants’ 

discriminatory intent”) (ECOA/FHA). 

52 Ortiz v. Werner Enters., Inc., 834 F.3d 760, 765 (7th Cir. 2016) (evaluating a claim under Title VII); Sims v. 

New Penn Fin. LLC, 2018 WL 1523212, *10 (N.D. Ind. 2018) (applying holding in Ortiz to ECOA matter). 

53 See Swierkiewicz v. Sorema, 534 U.S. 506, 508 (2002) (holding that plaintiff at the pleading stage in a 

discrimination case must allege only a short and plain statement of the claim so as to give the defendant fair 

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Discouragement of prospective applicants on the basis of race is a form of illegal 

discrimination. Unlawful discrimination may be based on the race of a particular applicant or 

prospective applicant or on the racial characteristics of a neighborhood generally.54 The Amended 

Complaint provides several examples of Townstone’s statements that would have discouraged 

reasonable prospective applicants on the basis of race, including that Townstone disparaged 

majority-African-American neighborhoods as “hoodlum weekend” and approaching “a real war 

zone” or as “crazy” and places “to be driven through quickly” while avoiding eye contact; referred 

to a place with “people from all over the world” as a “jungle” and “scary”; and disparaged the 

women of a predominantly African-American area in Chicago.55 Townstone recorded and posted 

these statements as part of its marketing on its website and elsewhere online.56 The alleged facts also 

include statistical evidence that Townstone did not draw applications from African Americans or 

from African-American neighborhoods in the Chicago MSA, as well as descriptions of Townstone’s 

hiring and marketing practices, all of which also support the Bureau’s claims of discouragement and 

discrimination in violation of ECOA and Regulation B.57 Townstone challenges these specific factual 

pleadings as improper under the APA, but a pleading is not a rulemaking or final agency action, so 

the Amended Complaint does not implicate the APA. 

notice of the claim and the grounds upon which it rests) (Title VII); United States v. Union Auto Sales, Inc., 490 

F. App’x 847, 848 (9th Cir. 2012) (reversing dismissal of a discrimination claim under ECOA because, “[a]t 

the pleading stage, the United States is not required to demonstrate discrimination, but merely to allege facts 

sufficient to make a discrimination claim plausible”). 

54 See Hood v. Midwest Sav. Bank, 95 F. App’x 768, 778 (6th Cir. 2004) (finding that the plaintiff is in a 

protected class for the purposes of ECOA and FHA claims in part because the property is located in a 

predominantly African-American community); Davis v. Strata Corp., 242 F. Supp. 2d 643, 650 (D.N.D. 2003)

(finding that a plaintiff who was denied credit in part because he lived on an Indian reservation stated a valid 

ECOA claim); Cherry v. Amoco Oil Co., 481 F. Supp. 727, 730 (N.D. Ga. 1979) (holding that a complaint stated 

a claim under ECOA where a white plaintiff alleged a denial of consumer credit based, in part, on the fact 

that she lived in a predominantly Black neighborhood). 

55 Am. Compl. ¶ 38. 56 Am. Compl. ¶ 29. 57 Am. Compl. ¶¶ 40–52. 

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Statistical disparities have long been regarded as a reliable indicator of disparate-treatment 

discrimination.58 The statistical evidence cited in the Amended Complaint59 supports the Bureau’s 

claims because it alleges that (1) Townstone failed to draw applications from African Americans or 

from African-American neighborhoods in the Chicago MSA; (2) similar mortgage lenders in the 

Chicago MSA did draw applications from African Americans or African-American neighborhoods in 

the Chicago MSA; (3) the most likely explanation for these disparities is Townstone’s discouraging 

conduct; and (4) Townstone’s conduct did discourage prospective applicants on a prohibited basis. 

Accordingly, this statistical evidence and the inferences that can be drawn from this evidence support 

the Bureau’s claims that Townstone made statements that “would discourage on a prohibited basis a 

reasonable person from making or pursuing an application.”60 Townstone characterizes these 

allegations as creating new affirmative obligations under ECOA.61 But the use of statistical evidence, 

such as application shortfalls and disparities, is plainly relevant to the determination of discouragement 

and discriminatory intent in this matter. It is similar to evidence used to support plausible claims of 

illegal discriminatory treatment in other litigated matters,62 and it is consistent with the data analyses 

used as evidence of discouraging and discriminatory conduct regularly pleaded over decades of ECOA 

enforcement.63 

58 See Hazelwood Sch. Dist. v. United States, 433 U.S. 299, 308, 313 (1977) (comparing the percentage of AfricanAmerican teachers hired by the defendant to the percentage of African-American teachers hired by other 

school districts in the area) (Title VII); Int’l Bhd. of Teamsters v. United States, 431 U.S. 324, 339 (1977)

(“Statistics showing racial or ethnic imbalance are probative . . . because such imbalance is often a telltale sign 

of purposeful discrimination.”) (Title VII); EEOC v. O & G Spring & Wire Forms Specialty Co., 38 F.3d 872, 

876 (7th Cir. 1994) (recognizing that statistical evidence can be used to show an intent to discriminate) (Title 

VII). 

59 Am. Compl. ¶¶ 42–50. 60 12 C.F.R. § 1002.4(b). 61 Townstone Mem. 9. 62 Supra at note 58. 

63 See, e.g., Compl., United States v. Decatur Fed. Sav. & Loan Ass’n, Civil Action No. 1:92-cv-02198 (N.D. Ga. 

Mar. 17, 1992) (only 6% of applications came from Black applicants); Compl., United States v. First United Sec. 

Bank, Civil Action No. 09-0644 (S.D. Ala. Sept. 30, 2009) (defendant received only 14% percent of 

applications from majority-black areas, whereas comparable lenders in the area received about 31%); Compl., 

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Similarly, the Amended Complaint alleges that Townstone did not market to African 

Americans, despite marketing specifically to other demographic communities in the Chicago MSA, 

and that Townstone lacked African-American loan officers, despite its acknowledgement that its 

loan officers from other demographic groups aided in outreach to those groups.64 These facts, when 

considered alongside Townstone’s discouraging statements—made on its marketing infomercial 

called the Townstone Financial Show—and the lack of applications from African Americans and 

African-American neighborhoods, are highly relevant to the determination of Townstone’s 

discriminatory intent and avoidance of the credit needs of African-Americans and African-American 

neighborhoods,65 all of which support the Bureau’s claims of discouragement and intentional 

discrimination in violation of ECOA and Regulation B.66 Courts have recognized the relevance of 

such evidence in redlining matters.67 And prior ECOA enforcement matters relating to 

United States v. KleinBank, No. 0:17-cv-00136 (D. Minn. Jan. 13, 2017) (“comparable lenders generated 

applications in majority-minority tracts at over five times the rate of KleinBank, and originated loans in 

majority-minority tracts at over four times the rate of KleinBank.”); Compl., United States v. First Merchs. Bank, 

Civil Action No. 1:19-cv-02365 (S.D. Ind. June 13, 2019) (“between 2011 and 2017, First Merchants Bank 

severely underperformed comparable lenders in generating residential mortgage loan applications from 

majority-Black areas within the Indianapolis-Carmel-Anderson MSA”). 

64 Am. Compl. ¶¶ 39–40, 51. 65 Am. Compl. ¶ 14. 66 Am. Compl. ¶¶ 54–55. 67 See, e.g., U.S. v. KleinBank, No. 0:17-cv-00136, ECF No. 93 at 10-11 (D. Minn. Jan. 30, 2018) (finding that 

defendant’s marketing efforts that potentially avoided minority borrowers contributed to plausible ECOA 

and FHA claims); City of Sacramento v. Wells Fargo & Co., 2019 WL 3975590, at *1, 7 (E.D. Cal. 2019) (denying 

motion to dismiss FHA claims based, in part, on loan officer comments consistent with racial profiling and 

non-Spanish speaking loan officers “more often than not” serving Spanish-speaking borrowers). 

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discrimination in mortgage lending, especially redlining, have relied on similar marketing68 and 

hiring69 allegations. 

II. Neither Regulation B nor this action violates the First Amendment. 

The First Amendment provides no basis for dismissing any claim or count. Townstone 

argues that Regulation B should be reviewed under the strict-scrutiny standard appropriate for 

content-based and viewpoint-based speech restrictions.70 But this action does not implicate speech 

protected by the First Amendment. The challenged statements, made during a marketing 

infomercial, are commercial speech and relate to illegal discrimination. This commercial speech by 

Townstone falls outside the First Amendment’s protections. Even if covered by the First 

Amendment, only the lesser constitutional protection available to commercial speech would apply, 

and Regulation B survives the intermediate scrutiny applied to regulations implicating such speech.

68 See, e.g., Compl., United States v. Decatur Fed. Sav. & Loan Ass’n, No. 1:92-cv-02198 (N.D. Ga. Mar. 17, 1992)

(“In advertising its mortgage products through the media, Defendant has rarely or never utilized newspapers, 

radio stations, or other media that are oriented to the black community of Atlanta.”); Compl., United States v. 

Chevy Chase Fed. Sav. Bank, No. 1:94-cv-01829, (D.D.C. Aug. 22, 1994) (“defendants have rarely or never 

utilized newspapers, radio stations, or other media that are oriented to the African American community”); 

Compl., United States v. First Am. Bank, No. 04C 4585 (N.D. Ill. July 13, 2004) (“The Bank has directed its 

radio advertising to stations that target ‘general audiences’, although many minority format stations exist in 

the Chicago MSA market. In advertising its products and services through the media, First American never 

utilized radio stations oriented to minority communities in the Chicago MSA until after the Board's criticism 

of those advertising practices.”); Compl., CFPB v. Hudson City Savs. Bank, F.S.B., No. 2:15-cv-07056 (D. N.J. 

Sept. 24, 2015) (“Hudson City engaged in limited marketing outside of its branch network, and therefore 

failed to advertise meaningfully in majority-Black-and-Hispanic neighborhoods.”). 

69 See, e.g., Compl., United States v. Decatur Fed. Sav. & Loan Assoc., No. 1:92-cv-02198 (N.D. Ga. Mar. 17, 1992)

(defendant employed only white real-estate appraisers); Compl., United States v. Blackpipe State Bank, No. 93-

5115 (D.S.D. 1993) (defendant did not employ any Native Americans); Compl., United States v. BancorpSouth 

Bank, No. 1:16-cv-00118 (N.D. Miss. June 29, 2016) (more than 95% percent of loan officers hired by 

defendant were white). 

70 See Townstone Mem. 12–14. 

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A. This action does not implicate speech protected by the First Amendment. 

In evaluating First Amendment claims, a court must first determine whether speech is being 

regulated at all, and, if it is, the court must determine the “proper classification” of the statements 

and conduct at issue.71 Where a government action restricts or compels some speech only 

incidentally to the government’s regulation of conduct, the First Amendment is not implicated: “it 

has never been deemed an abridgment of freedom of speech . . . to make a course of conduct illegal 

merely because the conduct was in part initiated, evidenced, or carried out by means of language, 

either spoken, written or printed.”72 Where government action clearly affects expressive conduct, the 

court should assess the nature of that expressive conduct because certain speech, like “commercial 

speech,” is accorded lesser constitutional protection.73 

Under this framework, this case does not implicate speech protected by the First 

Amendment. The First Amendment does not prevent restrictions directed at commerce or conduct 

from imposing incidental burdens on speech.74 Congress “can prohibit employers from 

discriminating in hiring on the basis of race.”75 And a “ban on race-based hiring may require 

employers to remove ‘White Applicants Only’ signs.”76 ECOA’s prohibition of discrimination in 

credit transactions and Regulation B’s prohibition of discouragement of prospective applicants 

(which covers “acts or practices” that could “discourage a reasonable person, on a prohibited basis, 

from applying for credit,”77 and is designed to prevent the core antidiscrimination provision of 

ECOA from being a dead letter) fall squarely within this category of permissible regulation of 

71 See Bolger v. Youngs Drug. Prod. Corp., 463 U.S. 60, 65 (1983). 72 Rumsfeld v. F.A.I.R., 547 U.S. 47, 62 (2006).

73 See Jordan v. Jewel Food Stores, Inc., 743 F.3d 509, 514 (2014). 74 Nat’l Inst. of Family & Life Advocates v. Becerra, 138 S. Ct. 2361, 2373 (2018); see also Sorrell v. IMS Health Inc., 

564 U.S. 552, 567 (2011). 75 Rumsfeld, 547 U.S. at 62. 76 Sorrell, 564 U.S. at 567 (referencing RAV v. City of St. Paul, 505 U.S. 377, 389 (1992). 77 12 C.F.R. part 1002, Supp. I, Comment 4(b). 

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commercial conduct that may impose incidental burdens on expression. Congress enacted ECOA to 

counteract a “clear pattern” of discrimination78 and to make credit “equally available to all 

creditworthy customers.”79 Protecting equal access to credit is a permissible, commercial objective, 

and any attendant, incidental impact on expression occasioned by enforcement of ECOA, via 

Regulation B, is no more protected than the “White Applicants Only” sign that the Supreme Court 

acknowledged can be permissibly prohibited under a lawful ban on race-based hiring.80 Neither 

represents any more than “a particular content-based subcategory of a proscribable class of speech” 

being “swept up incidentally within the reach of a statute directed at conduct rather than speech.”81

Even if Regulation B’s prohibition on creditor advertising that expresses, implies, or suggests 

a discriminatory preference82 is viewed as a non-incidental restriction of speech, it does not run afoul 

of the First Amendment because the First Amendment does not protect speech that proposes 

unlawful transactions, particularly in the commercial context.83 Simply put: “[t]he government may 

ban . . . commercial speech related to illegal activity.”84 

In Pittsburgh Press v. Pittsburgh Commission on Human Relations, the Supreme Court described a 

prohibition of commercial speech related to an ordinance that barred employers from discriminating 

against any person with respect to hiring because of sex and prohibited any other person to aid 

employers in publishing advertisements “which indicate[] any discrimination because of . . . sex.”85 A 

newspaper that had allowed employers to advertise jobs in sex-specific columns (e.g., “Jobs—Male 

Interest,” “Jobs—Female Interest,” and “Male-Female”) challenged under the First Amendment an 

78 S. Rep. No. 93-278, 93d Cong., 1st Sess. 16, 16–17 (1973). 

79 Equal Credit Opportunity Act of 1974, Pub. L. No. 93-495, 88 Stat. 1521.

80 See RAV, 505 U.S. at 389. 81 Id. 82 12 C.F.R. pt. 1002, Supp. I, 1002.4(b)(1)(ii). 83 See Infra, Section II.B for further discussion of the parameters of “commercial” speech. 84 Cent. Hudson, 447 U.S. at 563–64 (citations omitted). 

85 Pittsburgh Press v. Pittsburgh Comm’n on Hum. Rels., 413 U.S. 376, 378 (1973). 

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order enforcing the ordinance.86 The Supreme Court rejected the challenge and explained that “[t]he 

advertisements, as embroidered by their placement, signaled that the advertisers were likely to show 

an illegal sex preference in their hiring decisions.”87 As a result, “[a]ny First Amendment interest 

which might be served by advertising an ordinary commercial proposal and which might arguably 

outweigh the governmental interest supporting the regulation is altogether absent when the 

commercial activity itself is illegal and the restriction on advertising is incidental to a valid limitation 

on economic activity.”88 The Supreme Court has repeatedly reaffirmed this basic principle, both 

generally89 and with respect to discrimination.90 

Applying Pittsburgh Press, a series of appellate decisions have rejected First Amendment 

challenges to a provision of the FHA91 that prohibits conduct similar to that addressed in Regulation 

B. Section 3604(c) of the FHA prohibits making statements “with respect to the sale or rental of a 

dwelling that indicates any preference, limitation, or discrimination based on race, color, religion, 

sex, handicap, familial status, or national origin, or an intention to make any such preference, 

limitation, or discrimination.”92 As the Second Circuit has explained, “[c]ourts have consistently 

found that commercial speech that violates [§ 3604(c)] is not protected by the First Amendment.”93

According to the Official Interpretation, practices prohibited by Regulation B include “[t]he 

use of words, symbols, models or other forms of communication in advertising that express, imply, 

86 Id. at 380. 87 Id. at 389. 88 Id. at 389. 89 United States v. Williams, 553 U.S. 285, 297 (2008) (“Offers to engage in illegal transactions are categorically 

excluded from First Amendment protection.”) 

90 Sorrell, 564 U.S. at 567 (2011) (noting that a “ban on race-based hiring may require employers to remove 

‘White Applicants Only’ signs”) (quoting Rumsfeld v. Forum for Acad. and Inst. Rights, Inc., 547 U.S. 47, 62 

(2006)). 

91 42 U.S.C. § 3604(c). 92 42 U.S.C. § 3604(c). 93 United States v. Space Hunters, Inc., F.3d 416, 425 (2d Cir. 2005); see also Campbell v. Robb, 162 F. Appx. 460, 

468-72 (6th Cir. 2006); United States ex rel. Jackson v. Racey, 112 F.3d 512, at *1 (4th Cir. May 7, 1997); Ragin v. 

NY Times, 923 F.2d 995, 1002–05 (2d Cir. 1991); United States v. Hunter, 459 F.2d 205, 211–13 (4th Cir. 1972). 

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or suggest a discriminatory preference or a policy of exclusion in violation of the Act.”94 The 

similarities between Regulation B and § 3604(c) (prohibiting communications “indicat[ing] any 

preference, limitation, or discrimination based on race. . .”) justify the same conclusion that courts 

have reached on § 3604(c)—that commercial speech that violates Regulation B is not protected by 

the First Amendment. 

B. Even if the challenged communications are protected speech, they are 

commercial speech appropriately subject to regulation here. 

Even if the challenged communications were protected speech, they would be commercial 

speech properly subject to regulation here because Regulation B directly advances the Bureau’s 

substantial interest in prohibiting discriminatory lending.95

1. Commercial speech mixed with discussion of public issues remains 

commercial speech. 

While the “core notion” of “commercial speech” is speech that does “no more than propose 

a commercial transaction,” the Supreme Court has made clear that for purposes of the First 

Amendment, “commercial speech” is not so narrowly defined.96 Instead, “commercial speech” can 

include materials that contain both advertising elements and “discussions of important public 

issues.”97 Townstone argues that its statements should be treated as fully protected “political speech” 

because they “reflect on the public issue of crime.”98 But the Court has made clear that advertising 

94 12 C.F.R. part 1002, Supp. I, Comment 4(b). This addition to the Official Interpretations was finalized in 

1985 after notice of proposed rulemaking and review of public comments. 50 Fed. Reg. 48,050 (Nov. 12, 

1985). 95 See Cent. Hudson Gas & Elec. Corp. v. Pub. Serv. Comm’n of N.Y., 447 U.S. 557 (1980). 96 See Bolger v. Youngs Drug Prods. Corp., 463 U.S. 60, 67–68 (1983). 97 Id.

98 Townstone Mem. 12. 

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that “links a product to a current public debate is not thereby entitled to the constitutional 

protection afforded noncommercial speech.”99

In Bolger v. Youngs Drug Products, for example, the Supreme Court evaluated whether the 

Postal Service could apply a statute to restrict the mailing of a contraceptives manufacturer’s 

informational pamphlet that discussed the desirability and availability of prophylactics in general and 

contained limited information about the manufacturer’s specific products. The Court found that 

“the mailings constitute commercial speech notwithstanding the fact that they contain discussions of 

important public issues such as venereal disease and family planning.”100 In analyzing the 

informational pamphlets in Bolger, the Court relied on the fact that the informational pamphlets 

“were a form of advertising, [that] they referred to specific commercial products, and [that] they 

were distributed ... for economic purposes.”101 The Court noted that none of these factors alone 

was determinative but the “combination of all these characteristics . . . provide[d] strong support for 

the . . . conclusion that the informational pamphlets are properly characterized as commercial 

speech.”102 

Similarly, in Jordan v. Jewel Food Stores, the Seventh Circuit found that a grocery store’s 

advertisement congratulating Michael Jordan for his induction into the Basketball Hall of Fame was 

commercial speech because communications may “constitute commercial speech notwithstanding 

the fact that they contain discussions of important public issues,” and advertisements that are meant 

to burnish a company’s brand through commentary on a matter of public interest should be treated 

99 Cent. Hudson, 447 U.S. at 562 n5; see also Jordan v. Jewel Food Stores, Inc., 743 F.3d 509, 516 (7th Cir. 2014)

(citing Bolger, 463 U.S. at 67–68). 

100 Bolger, 463 U.S. at 67–68. 101 743 F.3d at 517 (discussing Bolger, 463 U.S. at 62). 

102 Bolger, 463 U.S. at 67. 

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as commercial speech.103 This is consistent with other cases treating infomercials—which combine 

advertising and commentary on public issues—as commercial speech.104

Even if Townstone’s discouraging statements and other commercial speech broadcast on the 

Townstone Financial Show contained discussions of public issues, they would remain commercial 

speech properly subject to Regulation B. The repeated promotion of Townstone’s services and the 

promise of the benefits that prospective applicants might expect from applying for mortgage loans 

from Townstone highlight the commercial nature of the Townstone Financial Show radio 

broadcasts and podcasts.105 

2. The Bureau’s regulation of Townstone’s commercial speech directly 

advances the Bureau’s substantial interest in prohibiting 

discriminatory lending. 

The validity of a restriction on commercial speech is analyzed under a four-part test that 

considers (1) whether the speech is constitutionally protected; (2) whether the governmental interest 

is substantial; (3) whether the regulation directly advances the government interest asserted; and (4) 

whether the restriction is narrowly drawn,106 i.e., “reasonably well tailored to its stated objective.”107

“[C]ommensurate with [the] subordinate position of [commercial speech] in the scale of First 

Amendment values,” “the fit needn’t be perfect, but only ‘reasonable’ . . . not necessarily the single 

best disposition but one whose scope is in proportion to the interest served.”108 

103 743 F.3d at 516. 104 See, e.g., FTC v. Trudeau, 662 F.3d 947 (7th Cir. 2011) (holding that an infomercial about weight-loss books 

was commercial speech); see also U.S. v. Bell, 414 F.3d 474 (3d Cir. 2005) (holding that “[p]ackaging a 

commercial message with token political commentary does not insulate commercial speech from appropriate 

restrictions”). 

105 Am. Compl. ¶ 26–29; Townstone Mem. 2 (“Part of Townstone’s advertising efforts include producing the 

Townstone Financial Show”) (emphasis added); Townstone Mem. 19 (“the Townstone Financial Show was 

designed to create interest in Townstone”). 

106 Cent. Hudson, 447 U.S. at 566. 107 Trudeau, 662 F.3d at 953 (applying test set out in Cent. Hudson, 447 U.S. at 564–65). 

108 Id.

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Regulation B and the Bureau’s claims do not run afoul of this four-part test. First, the speech 

at issue here is not constitutionally protected. For commercial speech to come within the First 

Amendment, it at least must concern lawful activity and not be misleading.109 Townstone’s speech at 

issue here concerns unlawful activity, and thus, the Court’s inquiry should end. Even if the analysis 

does not end here, however, the Bureau’s action survives the remaining prongs of the intermediatescrutiny analysis. The Bureau’s interest in prohibiting unlawful discrimination in lending and 

promoting the availability of credit to all creditworthy applicants without regard to race is 

substantial. Townstone concedes this point and offers no argument that Regulation B’s 

discouragement provision does not advance a substantial interest.110 But that point could hardly be 

disputed. Congress concluded that credit is “a virtual necessity of life” for most Americans and 

enacted ECOA to address “widespread discrimination.”111 With the purpose of eradicating that 

discrimination, the statute required the Board, now the Bureau, to promulgate regulations “to 

prevent circumvention or evasion” of the statute’s purposes, resulting in Regulation B’s 

discouragement provision, which directly advances this substantial interest. In prohibiting 

statements that discourage prospective applicants, Regulation B is no more extensive than necessary 

to prevent creditors from circumventing and evading the statute’s goal of stopping unlawful 

discrimination. 

The Bureau is not required, as Townstone argues, to demonstrate that “there are more 

effective, constitutionally permissible ways to achieve the government’s goal.”112 Nevertheless, 

Townstone’s suggestion that the government could achieve its goal through programs to assist 

applicants in obtaining credit is erroneous because such programs do not necessarily advance the 

109 Cent. Hudson, 447 U.S. at 563–64. 110 Townstone Mem. 14–15. 111 S. Rep. No. 94-589, at 3–4 (1976); S. Rep. No. 93-278, at 16 (1973). 112 Townstone Mem. 15. 

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government’s interest in ensuring that credit is made available without regard to race or other 

prohibited characteristics.113 Likewise, Townstone’s suggestion that the government “embark on an 

educational program [to] promote the availability of credit . . . without regard to race”114 is 

insufficient because such a program educates credit applicants and prospective applicants without 

advancing the government’s interest in making sure that credit is not being offered on discriminatory 

bases. 

C. Neither this action nor Regulation B is unconstitutionally vague. 

Townstone’s facial and as-applied First Amendment challenges to Regulation B are 

misplaced because the First Amendment does not apply to the commercial speech implicated 

here.115 Even if it did, facial challenges are disfavored because they are speculative, raise the risk of 

premature interpretation, and run contrary to the principal of judicial restraint.116 In order to 

invalidate a statute for unconstitutional vagueness in a facial challenge, the statute must have a 

“potential chilling effect on protected expression” that is both “real and substantial.”117 But 

Townstone does not explain why this hypothetical chilling is either “real” or “substantial,” especially 

in light of decisions rejecting vagueness challenges to the FHA provision that is analogous to 

113 Townstone is wrong to suggest that the Bureau separately challenges Townstone’s “not engaging in 

targeted advertising to African-Americans in Chicago.” Townstone Mem. 22. The Amended Complaint 

includes this allegation because the “totality” of Townstone’s conduct evidences that its statements are 

unlawfully discouraging. 

114 Townstone Mem. 15. 115 See supra at 16–19. 

116 Ctr for Indiv. Freedom v. Madigan, 697 F.3d 464, 476, 479 (7th Cir. 2012). 117 Id. (Where the First Amendment is implicated, “vagueness [implicating due process concerns] and 

overbreadth [in violation of the First Amendment] are two sides of the same coin, and the two sorts of 

challenges are often conceived of as ‘alternative and overlapping’ theories for relief on the same claim”); see 

also Wis. Right to Life, Inc. v. Barland, 751 F.3d 804, 835 (7th Cir. 2014) (“All laws must be clear and precise 

enough to give a person of ordinary intelligence fair notice about what is required of him and also to guard 

against the arbitrary and discriminatory exercise of enforcement discretion.” In the First Amendment context, 

where vague speech regulations could cause speakers to self-censor, courts evaluating laws facially challenged 

on vagueness and overbreadth grounds determine whether the relevant law reaches a substantial amount of 

constitutionally protected speech). 

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Regulation B.118 Further, because Townstone “engages in some conduct that is clearly proscribed,” it 

“cannot complain of the vagueness of the law as applied to the conduct of others.”119 Regulation B 

clearly prohibits mortgage-loan advertising with statements like those described in the Amended 

Complaint, including references to racially inflammatory symbols or linking Black neighborhoods to 

“scary” places.120 

The relevant test for discouragement in violation of Regulation B is whether the statement 

would discourage a “reasonable person”—here the reasonable African American or reasonable 

person considering a loan for property in an African-American neighborhood—from making or 

pursuing an application.121 Details regarding the creditor or prospective applicant are not relevant 

unless they contribute to understanding whether the reasonable prospective applicant would be 

discouraged on a prohibited basis from applying for a mortgage loan.The discouragement provision in 

no way disincentivizes creditors from giving proper advice or discussing underwriting standards 

because such conversations should have nothing to do with an applicant’s or prospective applicant’s 

prohibited-basis status. The reasonable-person test for discouragement is consistent with the caselaw 

and practice under analogous laws. As the Eighth Circuit has noted in the context of sexual 

harassment, for example, “[i]t makes no difference that the language in question may be 

unobjectionable to some groups of men. We must view the harassment from the victim’s 

perspective, and in this case the victim is a woman.”122 

118 Ragin, 923 F.2d 1002 (“Of course, close questions will arise, as they do in every area of the law, but we 

cannot say in the context of a facial challenge to the statute that the ordinary reader test ... - not a novel, 

untried concept – is a hopelessly vague legal standard”). 

119 Ctr for Indiv. Freedom, 697 F.3d 464, 479. 120 Am. Compl. ¶ 38. 121 See Ragin, 923 F.2d at 999–1000 (“Ordinary readers may reasonably infer a racial message from 

advertisements that are more subtle than the hypothetical swastika or burning cross”); Jancik v. HUD, 44 F.3d 

553 (7th Cir. 1995) (“the statute is violated by ‘any ad that would discourage an ordinary reader of a particular 

[protected group] from answering it.’”) (citing Ragin, 923 F.2d at 999–1000). 122 Burns v. McGregor Elec. Indus., Inc., 989 F.2d 959, 965 (8th Cir. 1993); see also Oncale v. Sundowner Offshore Servs., 

Inc., 523 U.S. 75, 81–82 (1998) (noting that “the objective severity of harassment should be judged from the 

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The reasonable prospective applicants who would be discouraged by the facts alleged in the 

Amended Complaint are a specific racial group or community, or those interested in living in 

majority-Black neighborhoods in a specific metropolitan area, not “literally anyone in the world,” as 

Townstone claims.123 As a result, Regulation B is not overbroad as applied to Townstone. For each 

of the discouraging statements described in the Amended Complaint,124 a reasonable African 

American prospective applicant or a prospective applicant seeking to finance the purchase of 

properties in African-American neighborhoods in the Chicago MSA could well (1) conclude that the 

statement conveys the Townstone Financial Show’s hosts’ intent to discourage, and (2) be 

discouraged, on the basis of race or the racial composition of particular neighborhoods, from 

submitting a mortgage-loan application. Thus, even if Townstone’s infomercials were “designed to 

create interest in Townstone” and were “heard across the entire Chicago MSA,” they contained 

discouraging and discriminatory content that would have a distinct effect on prospective applicants 

who are African-American or are living in or seeking credit in majority-Black neighborhoods in the 

area. 

III. ECOA and Regulation B provide fair notice of the prohibited conduct and comport 

with the Fifth Amendment. 

Townstone’s due-process challenge under the Fifth Amendment does not warrant dismissal 

of this action. Townstone argues that Regulation B’s discouragement provision fails to give fair 

notice of the specific conduct it prohibits and allows for arbitrary enforcement by the Bureau. 

Townstone does not meet the heavy burden faced by challengers trying to establish that a regulation 

is facially impermissibly vague. “A party raising a facial challenge to a statute or regulation on 

perspective of a reasonable person in the plaintiff’s position, considering all the circumstances,” and adding 

that the “inquiry requires careful consideration of the social context in which particular behavior occurs and is 

experienced by its target.”) (internal quotations omitted) 

123 Townstone Mem. 21. 124 See, e.g., Am. Compl. ¶¶ 32, 34, 36, 38, 40, 51. 

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vagueness grounds must demonstrate that the law is impermissibly vague in all of its applications.”125

Townstone does not claim that there are no circumstances in which Regulation B could be lawfully 

applied.126 

In FCC v. Fox Television Stations, the only case Townstone cites in its section about the Fifth 

Amendment, the Supreme Court found that the FCC violated a broadcast network’s due-process 

rights because it failed to give fair notice that, in contrast to a prior policy (that explicitly protected 

fleeting expletives and brief shots of nudity), a fleeting expletive or a brief shot of nudity could be 

actionably indecent.127 Unlike in Fox, Townstone does not claim there was a prior policy from which 

Reg B or the Bureau departed without notice.128 And the hypothetical creditor confusion Townstone 

alleges is premised on mischaracterizations of the Bureau’s enforcement action, which, as discussed 

above, focuses on discouragement, on the basis of race, of reasonable prospective applicants. 

Townstone’s as-applied challenge should be rejected because, as explained above, Regulation 

B gives fair notice of the conduct it covers, and courts have rejected arguments like the one 

125 Schor v. Daley, 563 F. Supp. 2d 893 (N.D. Ill. 2008). If the Court considers this to be a case where the 

challenged law “abuts upon sensitive areas of basic First Amendment freedoms,” under the First Amendment 

standard, discussed above, the Court evaluating a facial challenge should only invalidate as void for vagueness 

where the potential chilling effect on protected expression is both “real and substantial.” Sullivan-Knoff v. City 

of Chicago, 348 F. Supp. 3d 787, 795 (N.D. Ill. 2018) (relying on Ctr. for Individual Freedom v. Madigan, 697 F.3d 

464, 478–79 (7th Cir. 2012)). As discussed in Section II.C above, Townstone does not explain why any 

alleged chilling here is either “real” or “substantial.” While Townstone hypothesizes that allegedly vague 

terms in Reg B could have “unknown reach” in certain hypothetical situations, the hypotheticals are too 

attenuated for any chilling to be considered real or substantial, and “speculation about possible vagueness in 

hypothetical situations not before the Court will not support a facial attack . . . when [the challenged law] is 

surely valid ‘in the vast majority of its intended applications.’” Hill v. Colorado, 530 U.S. 703, 733 (2000). 

Townstone does not allege that Reg. B is not valid in the vast majority of its intended applications. 

126 Townstone Mem. 21–23. 127 FCC v. Fox Television Stations, Inc., 567 U.S. 239 (2012). 128 Contrary to Townstone’s allegations that the Bureau punished Townstone for things like not hiring loan 

officers “that include every specific racial or ethnic demographic in their market area,” (Townstone Mem. at 

22–23), as explained above, the Bureau focused on conduct that would discourage, on the basis of race, a 

reasonable potential applicant. 

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Townstone makes here—that prohibitions on “discouraging” statements are “unconstitutionally 

vague”129

IV. The fraudulent-transfer claim should not be dismissed. 

Federal Debt Collection Procedure130 § 3006(a) provides for the relief the Bureau seeks: 

avoidance of Townstone’s fraudulent money transfer to Sturner, payments to the Bureau “to the 

extent necessary to satisfy any monetary judgment entered in this case against Townstone,” and 

other relief “necessary to restore the Bureau to the position it would have been upon entry of 

judgment in this case if Townstone and Sturner had not engaged in a fraudulent transfer.”131 The 

remedies are available to satisfy the Bureau’s claim, whether the claim “is reduced to judgment, 

liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, 

equitable, secured, or unsecured.”132 Because the Bureau’s substantive claims survive the motion to 

dismiss, the fraudulent-conveyance claim against Sturner also survives. 

CONCLUSION 

Because ECOA authorizes the Bureau to promulgate regulations necessary to prevent 

circumvention and evasion of the statute, and because Regulation B’s discouragement prohibition is 

consistent with ECOA’s anti-discrimination purposes, Regulation B does not violate the APA. 

Further, Regulation B is a constitutionally compliant check on Townstone’s commercial speech. 

Townstone’s discouraging statements are illegal and not protected by the First Amendment. Even if 

129 Ragin, 923 F.2d at 999–1002 (finding § 3604(c) of the FHA, which was construed to cover “any ad [with 

respect to the sale or rental of a dwelling] that would discourage an ordinary reader of a particular race from 

answering it,” not to be unconstitutionally vague). 

130 28 U.S.C. §§ 3301–3308. 131 Am. Compl. 18 at ¶¶ (6)–(8). 

132 28 U.S.C. § 3301(3). 

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they were, Regulation B is narrowly drawn to fulfill a compelling state interest. As a result, the Court 

should deny the motion. 

 Respectfully submitted, 

CARA M. PETERSEN 

Acting Enforcement Director 

JEFFREY PAUL EHRLICH 

Deputy Enforcement Director 

KARA K. MILLER 

Assistant Litigation Deputy 

/s/ Barry E. Reiferson. . . . . . . . . . . . . . . . . . . 

BARRY REIFERSON, NY Reg. #4343893 

Email: barry.reiferson@cfpb.gov 

MICHAEL G. SALEMI, IL ARDC 6279741 

Email: michael.salemi@cfpb.gov 

VINCENT HERMAN, DC Bar #974596 

Email: vincent.herman@cfpb.gov 

MARY E. OLSON, IL ARDC 6297334 

Email: mary.olson@cfpb.gov 

230 S. Dearborn Street 

Suite 1590 

Chicago, IL 60604 

 and 

1700 G Street, NW 

Washington, DC 20552 

Telephone: (202) 435-9599 

Attorneys for the Bureau of Consumer Financial Protection 

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