QUESTION
In thinking about Spanish marketing materials, is there a
problem with having a Spanish website or flyers in Spanish?
ANSWER
Yes, there can be specific liabilities involved here. The risks
have to do with the language barriers that exist, which can, unfortunately,
lead to Regulation B violations, UDAAP violations, or EFTA violations. This is
because the borrowers may understand the materials that are presented in
Spanish, such as the website, but they may not understand the other materials
that are not in their language, such as the disclosures. The problems arise
when lenders are not executing correctly.
While it is fine to have a website in Spanish, the language
must continue throughout the entire process, which would include Spanish
disclosures, as well. If a lender is going to advertise in a language other
than English, they will be required to provide all documents and services in
Spanish for those borrowers. This pertains to the entire process, such as
disclosures and interpreter services.
Institutions still have the same responsibility under these
Regulations and Acts to ensure that all documentation is clear and easily
understood by their clients, and ensure that there is nothing which would
appear to be “Unfair” or “Deceptive”, under the UDAAP law. This would begin
with advertisement, and continue on through originations, disclosures, with
interpreter services and possibly through to loan servicing, if applicable, in
order to assist the borrowers in their language.
There has been an increase of regulatory scrutiny for the
past year on this subject. We have included some commentary to assist in the
understanding of what the requirements are.
In anticipation of a CFPB examination, here is a list of some
actions that should be implemented in order to
enforce and promote the protection of individuals that speak languages other
than English in the consumer financial marketplace, entities offering consumer
financial products and services should be proactive about monitoring their
operations for potential ECOA, EFTA, and UDAAP violations, as well as issues
involving other potential areas of vulnerability.
- Maintain a strong compliance management and review system that includes a focus on or sensitivity to potential language discrimination issues;
- Review current communication and transaction processes to ensure that non-English speaking individuals are given equal access to all consumer financial programs and services;
- Self-identify potential ECOA and EFTA violations and remediate those practices as quickly as possible;
- Implement a process to review marketing, offering, and transactional documents and materials, as well as other consumer-facing processes such as loan origination and consumer complaint systems, to screen for potential weaknesses and vulnerabilities related to language-based discrimination;
- Limit areas where consumer-facing employees are free to exercise “subjective and unguided discretion” when interacting with non-English speaking consumers to minimize the risk of practices with unlawful discriminatory effects;
- Conduct training programs for consumer-facing employees to increase awareness of and the appropriate handling of issues involving language-based discrimination, including educating employees on the potential for fair lending issues that could arise from the failure to appropriately handle potential language barriers;
- Clearly disclose the terms of any consumer financial product or service in English and, where applicable, the consumer’s primary foreign language, and obtain translation services, as appropriate, to avoid potential issues;
- Review customer complaints for signs of systemic ECOA, EFTA, or UDAAP issues arising from language-based discrimination complaints;
- Affirmatively cooperate with federal and state regulatory authorities to address issues of concern involving potential language discrimination issues, and seek out clarity in areas in which there may be some uncertainty; and
- Ensure accountability to monitor activities, maintain compliance programs, and address potential language-based discrimination issues throughout the organization, including at the level of senior management and Board of Directors.
Director/Regulatory Audits and Controls
Lenders Compliance Group
Executive Director/Servicers Compliance Group
