Toward a Stronger Financial History Antidiscrimination Norm

Abstract

This Article examines a topic at the intersection of consumer protection and antidiscrimination law: the use by employers and licensing organizations of applicants’ credit reports and financial histories in the hiring and licensing processes. The Article begins with a broad normative assessment of the merits of the practice by examining applicable “logics of personhood,” categories of a framework of antidiscrimination analysis that assesses whether traditionally unprotected groups are entitled to formal antidiscrimination safeguards. Thus, the Article considers whether financial histories validly and reliably reflect personality traits relevant to job performance. It then examines to what extent the use of financial history in the employment and licensing settings is a necessary and helpful deterrent to debt default — long regarded as a socially undesirable practice. Next, the Article evaluates the practice’s impact on traditionally disadvantaged groups by assessing its relationship to racial equality and social mobility. Finally, in a novel application of behavioral economics to the area of credit reports and financial history, this Article suggests that, in spite of the difficult conceptual distinctions between consumer debtors and traditional Title VII categories like race, sex, and national origin, the findings of behavioral economists suggest that an adverse financial status is more immutable than neoclassical economists have been willing to concede. These observations lend critical normative support to legislative efforts to establish a stronger financial history antidiscrimination norm.

Keywords: credit report, consumer law, bankruptcy, consumer report, employment law, antidiscrimination law, race, behavioral law and economics