Covered Institutions and Activities

The new law in Idaho targets financial institutions with total assets over a certain threshold. Covered institutions include:
* Banks with over $100 billion in total assets; and
* Payment processors, credit card networks, or other payment service providers that processed over $100 billion in transactions in the previous year. * National banks are specifically covered, even if they are not chartered in Idaho. The law extends beyond Idaho-chartered institutions, applying to any decision involving financial services, which is defined in general terms as “any financial product or service.”

Prohibited Discrimination Based on “Social Credit Scores”

At the heart of the statute is a prohibition on financial institutions using “social credit scores” to deny or restrict “financial services.” The law defines “social credit scores” broadly, including any analysis or rating that penalizes:
* Religious beliefs or practices;
* Political expression or associations;
* Failure to conduct diversity, equity, or gender-based audits;
* Refusal to assist employees in obtaining abortions or gender reassignment services; and/or
* Lawful business activities in the fossil fuel or firearms sectors. The statute allows institutions to apply financial risk-based standards to firearms and fossil fuel businesses, but only if the standards are impartial, quantifiable, and disclosed to customers.

New Explanation Requirement

If a financial institution denies or restricts services, an Idaho customer can request a written explanation. The institution must respond within 14 days and provide:
* A detailed basis for the decision;
* A copy of the applicable terms of service; and
* Specific contract provisions that justify the denial.

Enforcement and Private Rights of Action

Violations of the Transparency in Financial Services Act are treated as violations of Idaho’s Consumer Protection Act. The state attorney general may investigate violations and initiate enforcement actions. But the statute also creates a private right of action: Individuals harmed by violations can sue directly and seek remedies under Idaho’s consumer protection framework.

Preparing for Compliance

Financial institutions covered by the law should begin preparing in advance of the July 1, 2025, effective date. Key steps include:
* Evaluating whether service denial or risk assessment practices may encompass any of the prohibited “social credit” criteria. * Familiarizing compliance teams with the law’s requirements to ensure they understand the distinctions between legal risk management and impermissible discrimination. * Assigning personnel to process and respond to customer requests for explanation in a timely fashion.

A National Trend to Watch

Idaho is now the third state to pass a fair access to banking law, and it may not be the last. Financial institutions should give careful thought to their policies and models insofar as they touch on the hot-button activities and issues that animate the de-banking debate.

Key Definitions

*

: Often referred to as “de-banking,” this term refers to the practice of financial institutions denying or restricting services based on political, religious, or ideological factors. *

: This law requires financial institutions to ensure fair access to banking services, prohibiting discrimination based on certain criteria. *

: These standards are allowed for firearms and fossil fuel businesses, but only if they are impartial, quantifiable, and disclosed to customers. *

: This law provides remedies for individuals harmed by violations of the Transparency in Financial Services Act, allowing for private lawsuits and enforcement actions by the state attorney general.