What Is the Legal Definition of “Steering”?

In law, “steering” refers to directing or influencing a person’s choices—such as where to live, work, borrow, or how to pay—in a way that disadvantages them or benefits the actor, often based on protected characteristics or conflicted financial incentives; in many contexts, this conduct is unlawful under statutes like the Fair Housing Act, Title VII, and Truth in Lending (Regulation Z). More broadly, the term covers discriminatory channeling in housing and employment, conflicted guidance in lending, and efforts in markets to control or restrict how consumers are nudged toward certain options.

The core legal meaning

Across U.S. legal frameworks, steering involves three recurring elements: a party with influence over another’s choice; conduct or communications that channel the person to, or away from, particular options; and a prohibited basis or conflicted motive (e.g., protected trait or compensation). In discrimination law, steering typically targets protected classes and can violate federal and state civil rights statutes. In consumer finance, steering violates rules that bar loan officers from pushing borrowers into costlier products for higher compensation. In competition and payments, “steering” describes merchants guiding customers to preferred payment methods or channels, and “anti-steering” rules that restrict such guidance can raise antitrust issues.

Steering in key legal domains

Housing (Fair Housing Act)

In housing, steering is the practice of guiding prospective buyers or renters toward or away from neighborhoods or properties because of a protected characteristic such as race, color, religion, sex (including sexual orientation and gender identity), disability, familial status, or national origin. The Fair Housing Act (42 U.S.C. 3601–3619) and HUD’s regulations (including 24 C.F.R. 100.70) prohibit restricting, discouraging, or encouraging housing choices in ways that perpetuate segregation or discriminate on these grounds.

The following examples illustrate common forms of unlawful housing steering recognized by courts and regulators:

• Showing different listings, maps, or tour routes based on a prospect’s race, national origin, or family status.
• Using coded language about “schools,” “safety,” or “neighborhood fit” that channels people toward homogenous areas.
• Representing that homes are unavailable or less suitable in certain areas when they are, in fact, available.
• Directing tenants with children to specific buildings or floors, or away from amenities.

Such conduct can trigger administrative charges by HUD, civil suits by the Department of Justice, or private actions seeking damages, injunctive relief, and civil penalties. Liability may be based on intentional discrimination and, in certain circumstances, policies that have a discriminatory effect.

Employment (Title VII and related laws)

In the workplace, “assignment steering” occurs when employers channel applicants or employees into roles, shifts, territories, or client portfolios based on protected traits. Title VII of the Civil Rights Act (42 U.S.C. 2000e–2), Section 1981, the Age Discrimination in Employment Act, and the Americans with Disabilities Act prohibit steering that limits opportunities, pay, or advancement because of race, color, religion, sex (including sexual orientation, gender identity, and pregnancy), national origin, age, or disability.

These examples show how steering issues often arise in employment:

• Assigning women disproportionately to lower-paying “support” roles while men receive revenue-generating territories.
• Channeling older workers to back-of-house or night shifts with fewer tips or commissions.
• Limiting customer-facing roles based on accent, ethnicity, or perceived “cultural fit.”
• Routing pregnant employees away from key assignments without a legitimate, non-discriminatory basis.

Evidence can include patterns in assignments, comparative data, internal communications, and testimony. Remedies may include back pay, front pay, injunctive relief, and, in some cases, compensatory and punitive damages.

Lending and consumer finance (TILA/Reg Z, ECOA/Reg B, RESPA)

In consumer lending—especially mortgages—steering refers to pushing borrowers into higher-cost or otherwise less favorable loans to increase compensation or affiliate revenue. The Dodd-Frank Act and the Loan Originator Compensation Rule (Regulation Z, 12 C.F.R. 1026.36(e)) prohibit loan originators from receiving compensation that varies by loan terms and from “steering” consumers to loans not in their interest. While “discouragement” on a prohibited basis is expressly barred by ECOA/Reg B (12 C.F.R. 1002.4(b)), steering captures the broader conduct of channeling borrowers for conflicted reasons.

Common forms of unlawful steering in lending include:

• Directing a borrower to a costlier loan or add-on products to increase the originator’s or broker’s pay.
• Failing to present options that meet the borrower’s stated needs when a better-priced alternative is available.
• Channeling applicants toward affiliates (title, insurance, appraisal) without meaningful choice, where conflicts or higher costs result.
• Presenting options in a biased way (e.g., emphasizing short-term monthly payment while obscuring total costs) to favor a higher-compensation loan.

Reg Z provides an “anti-steering” safe harbor when originators present a set of options that includes the lowest interest rate available, the lowest total dollar amount for origination points/fees, and the lowest rate without risky features, subject to the borrower’s qualifications. Violations can lead to rescission rights, restitution, civil penalties, and enforcement actions by the CFPB and state regulators.

Competition and payments (antitrust and platform rules)

In competition law, “steering” often describes merchants guiding customers to preferred payment methods (e.g., lower-fee cards, cash) or to off-platform purchase channels. “Anti-steering” provisions—contractual rules that restrict such guidance—have been scrutinized in antitrust litigation and policy. In Ohio v. American Express Co. (2018), the Supreme Court addressed anti-steering rules in the credit-card market; more recently, digital platform rules and the EU’s Digital Markets Act have targeted anti-steering restrictions that prevent businesses from directing users to alternative channels.

Illustrative steering practices in this domain include:

• Merchants offering discounts or disclosures to encourage lower-cost payment options.
• Platforms or card networks imposing rules that limit surcharging, price differentiation, or off-platform referrals.
• App stores restricting developers from telling users about cheaper web-based subscriptions.

Whether steering or anti-steering is lawful depends on the specific market, the contractual restraints, and applicable statutes or competition rules. U.S. law evaluates such restraints under antitrust frameworks that consider market power and competitive effects.

How to recognize and prove steering

Proving steering is fact-specific and varies by statute, but investigators and counsel commonly look for the following elements and evidence:

1. Influence or control: The actor has authority or leverage over the person’s choices (agent, employer, lender, platform).
2. Channeling conduct: Words, materials, data flows, or policies that direct people toward or away from options.
3. Prohibited basis or conflicted motive: Protected characteristic or financial incentive driving the channeling.
4. Comparators and patterns: Differing treatment or outcomes across similarly situated individuals or groups.
5. Harm and causation: Adverse effects such as segregation, pay gaps, higher costs, or reduced access/opportunity.

Evidence can include “mystery shopper” testing, assignment and pricing data, scripts and training materials, compensation plans, internal messages, and consumer or employee testimony.

Consequences and remedies

Steering can lead to significant civil and regulatory exposure. Key consequences include:

• Injunctive relief requiring policy changes, training, monitoring, and independent audits.
• Damages (compensatory and, where permitted, punitive) and attorneys’ fees in private lawsuits.
• Civil penalties and restitution in government enforcement actions (HUD/DOJ, EEOC, CFPB, state AGs).
• Contractual and licensing consequences, including loss of approvals, franchise sanctions, or NMLS actions.

Beyond legal liability, steering can damage reputation, trigger class actions, and result in long-term compliance obligations.

Bottom line

Legally, “steering” is the practice of channeling people’s choices in housing, employment, lending, or commerce in ways that are discriminatory or conflicted—and in many circumstances, unlawful. The specifics depend on the domain, but the common thread is leveraging influence to direct outcomes for prohibited or self-interested reasons, with significant legal and financial consequences when detected.

What is an example of illegal steering?

Advising customers to purchase homes in particular neighborhoods on the basis of race. Failing, on the basis of race, to show, or to inform buyers of homes that meet their specifications.

What is the legal term steering?

: the discriminatory practice of showing a prospective home buyer or renter properties only in certain neighborhoods or areas based on a characteristic of the buyer or renter (as race or national origin)

What is the illegal act of steering?

The Fair Housing Act makes it illegal for a housing provider to attempt to influence or steer where a prospect lives due to the prospect’s race, color, religion, national origin, sex, familial status, or disabilities—otherwise known as protected categories.

Which of the following scenarios would be considered steering?

Steering is when a real estate agent influences a homebuyer to purchase in certain communities based on their race, therefore limiting the buyer’s choices. Let’s look at a hypothetical example of steering: a white buyer and a Black buyer approach the same real estate agent looking to buy homes.