Bureau of Consumer Fin. Prot. v. Townstone Fin., Inc.

Bureau of Consumer Fin. Prot. v. Townstone Fin., Inc.

Opinion

Memorandum Opinion and Order

The Equal Credit Opportunity Act (ECOA) makes it "unlawful for any creditor to discriminate against any applicant with, respect to any aspect of a credit transaction . . . on the basis of race, color, religion, national origin, sex or marital status, or age . . . ." 15 U.S.C. § 1691(a). The ECOA's implementing regulation, Regulation B, extends the ECOA's prohibition to "prospective applicants." 12 C.F.R. § 1002.4(b). The Bureau of Consumer Financial Protection (CFPB) filed this lawsuit against Townstone Financial, Inc. (Townstone), a mortgage broker/lender and its owner Barry Sturner (Sturner) (collectively, Defendants) for allegedly discouraging prospective African-American applicants in the Chicago metropolitan area from applying for mortgages. R. 27, First Amended Complaint (FAC).¹ Defendants have moved to dismiss the FAC with prejudice. R. 31, Mot. Dismiss. For the following reasons, Defendants' motion to dismiss is granted.

Background

I. The Parties

The CFPB is an independent agency of the United States created by the Consumer Financial Protection Act of 2010 (CFPA), with authority to enforce the CFPA and ECOA. FAC ¶ 8.² Townstone is [*3]  a mortgage broker/lender headquartered in Chicago, which operates in Illinois, Indiana, Michigan, Wisconsin, and Florida. Id. ¶ 9. Most of Townstone's mortgage lending and brokering takes place in the Chicago-Naperville-Elgin Metropolitan Statistical Area (Chicago MSA). Id. ¶¶ 4, 9. Sturner is Townstone's co-founder, sole owner, sole director, President, and Chief Executive Officer. Id. ¶ 13. Sturner is also a loan officer. Id.

II. The Townstone Financial Show

Starting as early as 2014, Townstone has marketed its services through its own radio show and podcast called "The Townstone Financial Show." FAC ¶ 24. The Townstone Financial Show was conducted weekly on AM radio and reached the entire Chicago MSA. Id. ¶ 29. A weekly podcast of the radio show is also made available online, and the show has been streamed on Facebook Live and advertised on Facebook, Twitter, and LinkedIn. Id. The Townstone Financial Show is a long-form commercial advertisement, in which the hosts discuss mortgage-related issues on the show and take questions from prospective applicants. Id. ¶ 26. Since about January 2015, the Townstone Financial Show has been co-hosted by Sturner and another senior loan officer. [*4]  Id. ¶ 27. Townstone's website and the Townstone Financial Show characterize the hosts of the Townstone Financial Show as "Chicago real-estate experts." Id. ¶ 28.

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