Final answer:
Damage costs for an individual violation of the ECOA are typically limited to compensatory damages with no cap and punitive damages capped at $10,000 in federal court.
Step-by-step explanation:
The Equal Credit Opportunity Act (ECOA) limits damage costs for an individual violation. While specific damage limits can vary based on amendments and interpretations of the law, as of the latest information available prior to the knowledge cutoff in 2023, individuals are typically allowed to recover compensatory and punitive damages. For compensatory damages, there is no cap, and individuals can recover actual damages which can include costs associated with the violation. Punitive damages are capped at $10,000 in federal court, but the cap can vary if the case is seen at the state level. Additionally, in cases of class actions, the ECOA limits punitive damages to the lesser of $500,000 or 1% of the creditor's net worth.
These damage costs are intended to serve as a deterrent against discrimination in lending practices. Much like fines issued by other regulatory agencies, such as those for OSHA violations or environmental law compliance, they reflect the seriousness of the offense and the importance of adhering to federal regulations intended to protect consumers and workers.