The Market Gap
Discrimination in the marketplace unfairly prevents LGBTQ consumers from obtaining needed goods and services and exacerbates the Wealth Gap because they are denied access to necessities, are provided products or services of inferior quality, or are overcharged.
Financial Services Discrimination
Discrimination in the market for financial services, for example, is especially harmful because it prevents LGBTQ people from leveraging their economic resources to obtain necessities, ease flow-of-payments, invest in durable goods, assets, or capital to improve their well-being. Without access to fair financial service, LGBT households can’t buy homes, workers can’t create savings for retirement, community leaders can’t start new organizations, and cycles of indebtedness and high-cost credit can result for at-risk consumers.
When LGBTQ consumers apply to open accounts or attempt to access their funds, they at times encounter discriminatory financial or customer
service professionals who provide service that is harassing or inferior:
- Almost 1-in-3 (32%) of LGBTQ student borrowers in 2018 reported discrimination from a financial aid advisor or professional.
- In Anchorage, Alaska nearly 1-in-25 LGBTQ people reported being denied a loan or credit line because of sexual orientation, gender identity, or gender presentation, while otherwise qualified.
Trans and GNC customers, in particular, are singled out and denied banking or credit services because of harassing treatment by staff or unfair and outdated policies requiring customers to produce multiple forms of matching identification to open accounts– and to obtain court-ordered name changes to manage accounts in their preferred name.
Discriminatory costs to LGBTQ customers add up. A more considerable disparate impact to the LGBTQ community results from widespread cases of unfair denials of banking and credit service, and the additional interest and fees added to loans. Analysis of mortgage lending data from the Federal Reserve by Iowa State researchers showed same-sex couples seeking home mortgages:
- Were rejected 73% more often than heterosexual couples
- Received .2% higher interest rates, on average
- Overpaid $86M each year for home mortgages they received
as compared to heterosexual couples, of similar financial and credit quality.
But because there is no data collection or prohibition on LGBTQ discrimination in lending, there is no hard data to make a definitive case for disparate impact in home mortgages. “We’ve never studied it. It has never come up for any of our clients,” Michael Taliefero, Managing Director for fair lending consultant ComplianceTech indicated to American Banker in 2014.
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