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Fair lending in online advertising

Apr 28, 2021

The pandemic has made us do more virtually, which means financial institutions are seeing more traffic on their websites. 

There are several things you can do on your website to encourage — and discourage — borrowers from using your institution for their credit needs.

Imagery selection

One of the most obvious things to consider is use of imagery. We have all heard that when using pictures of people, the photos should be diverse, but what does that mean? The Equal Credit Opportunity Act (ECOA) and the Department of Justice provide some direction.

The ECOA prohibits credit discrimination on the basis of race, color, religion, national origin, sex, marital status, age or receipt of income from any public assistance program or because a person has exercised certain legal rights under the ECOA and other financial statutes.

The Department of Justice’s Fair Housing Act (FHA) prohibits discrimination on the basis of race or color, national origin, religion, sex, familial status and handicap.

So when selecting imagery, you should ensure you are reflecting diverse people.

Some of these prohibited bases are easier to portray than others, but others may be more subtle.

For instance, age may be more difficult to ensure inclusion because it is not always easy to ascertain an age group from a photo. Usually, wide swings are used to provide various age categories such as over 62 and under 62 years old. Pay attention to religion as well. Try to avoid photos that show identifiable religious symbols. Inclusive photography can also encompass people with disabilities, single or married people, or families with children or without children. 

Imagery placement

Placement of imagery is another way that advertising can be discouraging to certain classes of individuals or perhaps steer them to a different product, perhaps even an inferior product. Take, for example, the use of photos placed near products that offer low down payments, alternative payment structures, homebuyer assistance programs, subprime loans or other nontraditional products. Make sure you aren’t using only photographs of minorities near these products while using non-minority photos for traditional products.

Beyond violating discrimination laws, it’s also important to ensure your photography doesn’t discourage potential loan applicants.

For example, make sure you’re showing a diversity in purchase items, such as cars or homes. Use a variety of new and used cars and homes at various price points.

Loan officer photos could be discouraging if the race, sex or ethnicity of the loan officers are not diverse. 

The last thing to consider is your online application system.

Is it user friendly and easy to operate, or is it cumbersome and clunky, perhaps making borrowers give up and go elsewhere? The user experience could have an impact on the number of applications received and loans originated based on a prohibited factor such as age.

Improving your product offering

Also, make sure your online system offers all types of loan products offered by your institution. For example, if the online system allows applicants to apply only for conventional fixed-rate mortgages, but shoppers are looking for other products such as FHA, VA, balloon payment or adjustable-rate mortgages, they may go to the competition for these products.

Your online application system may result in low levels of applications among certain groups or geographies, leading to concerns about redlining.

Your aggregate reporting of loan data could show that your institution received very few applications from certain high-minority areas or geographies or certain prohibited-basis groups, while your competitors — including large online mortgage companies — received more applications from these areas or groups because their systems were easier to navigate, provided faster responses and offered more products. 

Reduce your risk of fair lending violations

Even if unintentional, your choices of images, loan services and online applications can raise concerns about redlining. Being cognizant of how everything you do impacts your clients can help you stay within compliance.

Wipfli can assist you with your fair lending practices and help you reduce risk. Learn more about our compliance services for financial institutions on our web page.

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