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Senior citizen promotions & ECOA violations
Question: Our examiner just told us that our special platinum account package for customers aged 55 and over violates ECOA. Several of our branches are located in areas near retirement facilities and we have a large population of senior citizens. Is there any way that we create special benefits for senior citizen accounts without violating ECOA?
Answer: Yes, there are two ways. The first way is to offer special deposit products only that are not connected in any way to credit. For example, you could offer favorable rates or terms on checking accounts or savings accounts. However, if there are any credit benefits tied to these accounts you have to take additional steps to comply with ECOA and Regulation B.
When credit is involved, your accounts must comply with Regulation B's constraints on age based discrimination. Thus, the second way to offer special products to senior citizens is to base the product on the criterion that Regulation B permits: making the credit product available based on the applicant being age 62 or older. Age 62 is the cutting point for age discrimination purposes. If any credit is involved, you must use age 62 as the qualifying condition.
By using age 55 as the qualifying age for your platinum account package, you failed to meet the ECOA condition. However, if age 55 is still an important target age for you to use, you have some choices. You could, for example, offer deposit product only to customers aged 55 and older but only make the special credit products available when they reach age 62.
Copyright © 2003 Compliance Action. Originally appeared in Compliance Action, Vol. 8, No. 5, 6/03
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