Any action or forbearance relating to an account taken in connection with inactivity, default, or delinquency as to that account.A change in the terms of an account expressly agreed to by an applicant.To provide greater clarity about the definition, Regulation B also specifically delineates what is not adverse action: A refusal to increase the amount of credit available to an applicant who has made an application for an increase.A termination of an account or an unfavorable change in the terms of an account that does not affect all or substantially all of a class of the creditor’s accounts or.A refusal to grant credit in substantially the amount or on substantially the terms requested in an application unless the creditor makes a counteroffer (to grant credit in a different amount or on other terms), and the applicant uses or expressly accepts the credit offered.In this article, we review the adverse action requirements of both Regulation B and the FCRA, explain recent disclosure requirements under the FCRA mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), and discuss common adverse action violations. To ensure compliance, it is important to understand how the requirements of Regulation B and the FCRA relate to and differ from one another. To reduce the compliance burden, a creditor can use a single, combined notice to comply with the adverse action requirements of both laws, and model forms have been published in connection with Regulation B. Under the FCRA, the consumer has 60 days from the date of the notice to obtain more details about the negative information so that if it is erroneous, the consumer can correct it. The FCRA’s requirements for adverse action notices apply only to consumer transactions and are designed to alert consumers that negative information was the basis for the adverse action. Adverse action notices under the ECOA and Regulation B are designed to help consumers and businesses by providing transparency to the credit underwriting process and protecting against potential credit discrimination by requiring creditors to explain the reasons adverse action was taken. 1 Notice is also required under the FCRA for adverse actions taken with respect to insurance transactions, employment decisions, and in certain other circumstances. Two federal laws - the Equal Credit Opportunity Act (ECOA), as implemented by Regulation B, and the Fair Credit Reporting Act (FCRA) - reflect Congress’s determination that consumers and businesses applying for credit should receive notice of the reasons a creditor took adverse action on the application or on an existing credit account. Consumer Compliance Outlook: Second Quarter 2013 Adverse Action Notice Requirements Under the ECOA and the FCRAīy Sarah Ammermann, Examiner, Federal Reserve Bank of Minneapolis INTRODUCTION
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