Compliance Q&A: Adverse Action Reports

Q: The bank is denying an application for a deposit account, but we did not pull a credit report to make this determination. Is an adverse action notice required?

A: If the bank did not use a credit report to deny the deposit account application, then an adverse action notice would not be required under the FCRA, and Reg. B adverse action requirements only apply to extensions of credit, as set out below. It’s important to consider, however, that notice may still be required under the bank’s internal policy, so the bank would want to check there as well and be consistent with what it has done in similar situations in the past.

“(a) Account means an extension of credit.”

We also are aware that banks oftentimes will pull a ChexSystem or something similar to better understand the deposit relationships the customer has had with others and will oftentimes send a denial based off that information to ensure the customer or potential customer who knows who to contact in the event of errors.

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