Compliance Blog

Persons with Limited English Proficiency (LEP) are individuals who do not speak English as their primary language and who have limited ability to read, write, speak, or understand English. The share of non-English speakers has been rising steadily for more than three decades. According to a 2010 Census Report, in which people self-identified, there are over 24 million people in the United States who do not speak English “very well.” This includes people who classify themselves as speaking English “not well” and people who do not speak English at all.

Some of our NAFCU members provide services to minority communities, including Spanish-speaking populations. There are certain federal regulatory requirements to consider on the issue of using foreign language. In this blog, I will cover a non-exhaustive list of such requirements specifically for advertisements and providing disclosures.

Truth in Lending

Regulation Z explicitly prohibits certain acts or practices in advertisements for closed-end credit secured by a dwelling. Included under that prohibition is misleading foreign-language advertisements. Specifically:

“Providing information about some trigger terms or required disclosures, such as an initial rate or payment, only in a foreign language in an advertisement, but providing information about other trigger terms or required disclosures, such as information about the fully-indexed rate or fully amortizing payment, only in English in the same advertisement.” See, 12 C.F.R. § 1026.24(i)(7). 

Even though this does not directly address the foreign language issue regarding things like a contract or TILA/RESPA disclosures, it indicates that there should be continuity in the language of advertisements.

Fair Lending

Generally, credit unions “shall not discriminate against an applicant on a prohibited basis regarding any aspect of a credit transaction.” See, 12 C.F.R. §1002.4(a). Credit unions may want to consider what documents they are providing and/or what services they are advertising in one language versus another. For example, if only one kind of home mortgage loan would have the foreign language documents available but not other home lending products, it could be worth considering to what extent practices like that may have fair lending implications. Similarly, if only certain account products would have foreign language documents available, and not others, that could potentially have implications under state anti-discrimination statutes.

Fair Housing Act

The U.S. Department of Housing and Urban Development issued Guidance on Fair Housing Act (FHA) Protections for Persons with LEP. The guidance discusses how:

“the FHA applies to a housing provider’s consideration of a person’s limited ability to read, write, speak or understand English…. It addresses how the disparate treatment and discriminatory effects methods of proof apply in FHA cases in which a housing provider bases an adverse housing action – such as a refusal to rent or renew a lease – on an individual’s limited ability to read, write, speak or understand English.”

The guidance also explains that because of the close nexus between LEP and national origin, often, “lack of English proficiency is used as a proxy for national-origin discrimination.”

A housing provider violates the FHA if the provider uses a person’s LEP to discriminate intentionally because of race, national origin, or another protected characteristic. Selectively enforcing a language-related restriction based on a person’s protected class violates the Act, as does using LEP as a pretext for intentional discrimination. In such cases, the use of the language-related criteria is analyzed under the Act the same as is the use of any other potentially discriminatory criteria.  

Truth in Savings

Section 707.3(b)(3) contains a provision permitting disclosures to be made in a foreign language. The commentary to the rule explains, “disclosures may be made in any foreign language, if desired by the board of directors of a credit union. However, disclosures must also be provided in English, upon request.” See, 12 C.F.R Part 707, App. C, comment 3(b)-3. Credit unions using a foreign language in either advertisements or disclosures may want to consider having available both versions of any disclosures (English and foreign language), in case members make a request.

Electronic Fund Transfer Act

In a 2012 NCUA guidance, the agency explained credit unions are required to comply with the new remittance transfers provisions under Regulation E issued by the Consumer Financial Protection Bureau (CFPB). Regulation E requires credit unions to make available disclosures in any languages that the credit union may use to advertise its remittance transfers. Specifically, “disclosures must be made in English and, if applicable, any foreign language(s) [credit unions] use to advertise, solicit, or market money transfer services.”

NCUA Advertising Rules

Credit unions are required to follow NCUA’s rules in their advertisements. These rules prohibit credit unions from using advertisements that are inaccurate or misleading. It is possible that a practice such as using a foreign language in advertisements and then providing any required disclosures only in English could be construed as misleading because the advertisement may target those whose English is not as strong, thus, they may not be able to understand the disclosures in English. An argument could be made that advertising a product in a foreign language and expecting the consumer to understand any required disclosures -when such disclosures are provided in English- may not be a reasonable expectation.

CFPB’s Resources

The CFPB published a glossary of common financial terms was created and is used by the Bureau for translating consumer education materials from English to Spanish, in an effort to further the accessibility of financial information to LEP persons. The glossary of terms is not mandated, nor is it guidance or a requirement for any stakeholder. The CFPB also offers a number of other resources for the consumers with LEP, including:

• Publications in multiple languages;
• CFPB en Español;
• LEP persons can submit complaints to the CFPB in more than 180 languages via telephone at 855-411-2372.

Additional Considerations

Credit unions may want to consider the potential for any unfair, deceptive, or abusive acts or practices (UDAAP) risks for practices such as advertising a product or service in one language and providing disclosures and other contractual documents in another. The CFPB’s Examination Manual is a good source to check for UDAAP issues as it includes some useful examples. In addition, since some states may have specific provisions on foreign language translations of consumer contracts, credit unions may want to consult with local counsel familiar with state law for additional guidance.

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