Federal Reserve Board: Equal Credit Opportunity - Regulation B

8/6/2019 Federal Reserve Board: Equal Credit Opportunity - Regulation B

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13896 Federal Register / Vol. 76, No. 50/ Tuesday, March 15, 2011 / Proposed Rules

1Section 1100H of the Dodd-Frank Act providesthat the amendments in Subtitle H of Title X, whichincludes Section 1100F, become effective on thedesignated transfer date. The Secretary of theTreasury set the designated transfer date as July 21,2011. 75 FR 57252 (Sept. 20, 2010).

(d) Commercial consignments.Tomatoes with stems from the Republicof Korea may be imported incommercial consignments only.

(e) Phytosanitary certificate. Eachconsignment of tomatoes must beaccompanied by a phytosanitarycertificate of inspection issued by theNPPO of the Republic of Korea bearing

the following additional declaration:Tomatoes in this consignment weregrown in pest-exclusionary structures inaccordance with 7 CFR 319.5651 andwere inspected and found free fromBactrocera depressa, Heliocoverpaarmigera, Heliocoverpa assulta,Mamestra brassicae, Ostrinia furnacalis,Scirtothrips dorsalis, and Thrips palmi.

Done in Washington, DC, this 9th day ofMarch 2011.

Kevin Shea,

Acting Administrator, Animal and PlantHealth Inspection Service.

[FR Doc. 20115963 Filed 31411; 8:45 am]

BILLING CODE 341034P

FEDERAL RESERVE SYSTEM

12 CFR Part 202

[Regulation B; Docket No. R1408]

RIN No. 7100AD67

Equal Credit Opportunity

AGENCY: Board of Governors of theFederal Reserve System (Board).

ACTION: Notice of proposed rulemaking.

SUMMARY: Section 701 of the EqualCredit Opportunity Act (ECOA) requiresa creditor to notify a credit applicantwhen it has taken adverse action againstthe applicant. The ECOA adverse actionrequirements are implemented in theBoards Regulation B. Section 615(a) ofthe Fair Credit Reporting Act (FCRA)also requires a person to provide anotice when the person takes an adverseaction against a consumer based inwhole or in part on information in aconsumer report. Certain model noticesin Regulation B include the content

required by both the ECOA and theFCRA adverse action provisions, so thatcreditors can use the model notices tocomply with the adverse actionrequirements of both statutes. The Boardproposes to amend these model noticesin Regulation B to include thedisclosure of credit scores andinformation relating to credit scores if acredit score is used in taking adverseaction. These proposed amendmentsreflect the new content requirements insection 615(a) of the FCRA that wereadded by section 1100F of the Dodd-

Frank Wall Street Reform and ConsumerProtection Act.DATES: Comments must be received onor before April 14, 2011. Comments onthe Paperwork Reduction Act analysisset forth in Section III.A. of this FederalRegister notice must be received on or

before May 16, 2011.ADDRESSES: You may submit comments,identified by Docket No. R1408, by anyof the following methods:

Agency Web Site: http://www.federalreserve.gov.Follow theinstructions for submitting commentson the http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm.

Federal eRulemaking Portal: http://www.regulations.gov.Follow theinstructions for submitting comments.

E-mail:[email protected] docket number in the subjectline of the message.

FAX: 2024523819 or 202452

3102. Mail:Jennifer J. Johnson, Secretary,

Board of Governors of the FederalReserve System, 20th Street andConstitution Avenue, NW., Washington,DC 20551.

All public comments are availablefrom the Boards Web site at http://www.federalreserve.gov/generalinfo/

foia/ProposedRegs.cfmas submitted,unless modified for technical reasons.Accordingly, your comments will not beedited to remove any identifying orcontact information. Public commentsmay also be viewed electronically or in

paper in Room MP500 of the BoardsMartin Building (20th and C Streets,NW.) between 9 a.m. and 5 p.m. onweekdays.

FOR FURTHER INFORMATION CONTACT:Board: Mandie K. Aubrey, SeniorAttorney, or Catherine Henderson,Attorney, Division of Consumer andCommunity Affairs, (202) 4523667 or(202) 4522412, Board of Governors ofthe Federal Reserve System, 20th and CStreets, NW., Washington, DC 20551.For users of a TelecommunicationsDevice for the Deaf (TDD) only, contact(202) 2634869.

SUPPLEMENTARY INFORMATION:I. Background

The Equal Credit Opportunity Act(ECOA), 15 U.S.C. 1691 et seq., makesit unlawful for creditors to discriminatein any aspect of a credit transaction onthe basis of sex, race, color, religion,national origin, marital status, or age(provided the applicant has the capacityto contract), because all or part of anapplicants income derives from publicassistance, or because an applicant hasin good faith exercised any right under

the Consumer Credit Protection Act.The Boards Regulation B (12 CFR part202) implements the ECOA.

Section 701(d) of the ECOA generallyrequires a creditor to notify a creditapplicant against whom it has taken anadverse action. Under section 701(d)(6)of the ECOA, an adverse actiongenerally means a denial or revocation

of credit, a change in the terms of anexisting credit arrangement, or a refusalto grant credit in substantially theamount or on substantially the termsrequested.

Section 615(a) of the FCRA alsorequires a person to provide an adverseaction notice when the person takes anadverse action based in whole or in parton information in a consumer report.The definition of adverse action insection 603(k) of the FCRA incorporates,for purposes of credit transactions, thedefinition of adverse action underECOA. The adverse action provisions in

both the ECOA and the FCRA requirecertain disclosures to be given toconsumers.

The ECOA adverse action provisionsare implemented in Regulation B. Thereare no implementing regulations for theadverse action requirements of section615(a) of the FCRA. However, asexplained in comment 202.9(b)(2)9 ofRegulation B, certain model notices inRegulation B include the contentrequired by both the ECOA and theFCRA, so that persons can use themodel notices to comply with theadverse action requirements of bothstatutes.

On July 21, 2010, the Dodd-FrankWall Street Reform and ConsumerProtection Act (Dodd-Frank Act) wassigned into law. Public Law 111203,124 Stat. 1376. Section 1100F of theDodd-Frank Act amends section 615(a)of the FCRA to require creditors todisclose on FCRA adverse action noticesa credit score used in taking any adverseaction and information relating to thatscore. The effective date of theseamendments is July 21, 2011.1

The Board is proposing to amendthose model adverse action notices inRegulation B which incorporate the

content requirements of section 615(a)of the FCRA to reflect the new contentrequirements added by section 1100F ofthe Dodd-Frank Act. These revisions tothe model notices will help facilitateuniform compliance when section1100F of the Dodd-Frank Act becomeseffective. Thus, pursuant to its authority

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2The number of Board-supervised respondentswas obtained from numbers published in the Boardof Governors of the Federal Reserve System 96thAnnual Report 2009: 845 State member banks, 204branches & agencies of foreign banks, threecommercial lending companies, and 55 Edge Act oragreement corporations.

3U.S. Small Business Administration, Table ofSmall Business Size Standards Matched to NorthAmerican Industry Classification System Codes,available at http://www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdf.

from a consumer reporting agency wasconsidered in the credit decision.

Supplement I to Part 202Official StaffInterpretations

The Board proposes to amendcomment 9(b)(2)9 to reflect theproposed changes to the adverse actionmodel notices. Comment 9(b)(2)9

addresses the combined ECOAFCRAadverse action disclosures. Theproposed amendment would clarify thatthe FCRA requires a creditor to disclose,as applicable, a credit score it used intaking adverse action along with relatedinformation, including the key factorsthat adversely affected the consumerscredit score. It would also eliminate astatement that is redundant.

The proposed amendment tocomment 9(b)(2)9 would also clarifythat disclosing the key factors thatadversely affected the consumers creditscore does not satisfy the ECOA

requirement to disclose specific reasonsfor denying or taking other adverseaction on an application or extension ofcredit. The Board recognizes that a keyfactor(s) that adversely affected theconsumers credit score may be thesame as a specific reason(s) for denyingcredit or taking other adverse action.However, some specific reasons fortaking adverse action may be unrelatedto a consumers credit score, such asreasons related to the consumersincome, employment, or residency.Therefore, the Board believes thedisclosure of both the key factors thatadversely affected the consumers creditscore and the specific reasons fordenying credit or taking other adverseaction is necessary to fulfill the separaterequirements of the ECOA and theFCRA.

III. Regulatory Analysis

A. Paperwork Reduction Act

In accordance with the PaperworkReduction Act of 1995 (PRA) (44 U.S.C.3506; 5 CFR part 1320 Appendix A.1),the Board reviewed the proposedrulemaking under the authoritydelegated to the Board by the Office of

Management and Budget (OMB). Thecollection of information that isrequired by this proposed rulemaking isfound in 12 CFR 202. In addition, aspermitted by the PRA, the Board alsoproposes to extend for three years thecurrent recordkeeping and disclosurerequirements in connection withRegulation B. The Board may notconduct or sponsor, and an organizationis not required to respond to, thisinformation collection unless it displaysa currently valid OMB control number.The OMB control number is 71000201.

Section 703(a)(1) of the Equal CreditOpportunity Act (15 U.S.C. 1691b(a)(1))authorizes the Board to issue regulationsto carry out the provisions of the Act.The purpose of the Act is to ensure thatcredit is made available to allcreditworthy customers withoutdiscrimination on the basis of race,color, religion, national origin, sex,

marital status, age (provided theapplicant has the capacity to contract),receipt of public assistance income, orthe fact that the applicant has in goodfaith exercised any right under theConsumer Credit Protection Act (15U.S.C. 1600 et seq.). This informationcollection is mandatory.

Regulation B applies to all types ofcreditors, not just State member banks.However, under the PaperworkReduction Act, the Board accounts forthe burden of the paperwork associatedwith the regulation only for entities thatare supervised by the Board. Appendix

A of Regulation B defines thesecreditors as State member banks,branches and agencies of foreign banks(other than Federal branches, Federalagencies, and insured state branches offoreign banks), commercial lendingcompanies owned or controlled byforeign banks, and organizationsoperating under section 25 or 25A of theFederal Reserve Act. Other Federalagencies account for the paperwork

burden for the institutions theysupervise. Creditors are required toretain records for 12 to 25 months asevidence of compliance.

The current annual burden to comply

with the provisions of Regulation B isestimated to be 157,538 hours for the1,107 institutions 2 supervised by theBoard that are deemed to berespondents for the purposes of thePRA.

As discussed above, the Boardproposes to amend model notices C1through C5 to incorporate theadditional content requirementsprescribed by section 1100F of theDodd-Frank Act. In addition, the Boardproposes to amend Form C3 to clarifythe differences between a proprietaryscore and a credit score that is obtained

from a consumer reporting agency.The Board estimates that the proposedrule would impose a one-time increasein the total annual burden underRegulation B. The 1,107 respondentswould take, on average, 16 hours (two

business days) to update their systems

to comply with the disclosurerequirements addressed in 12 CFR part202. This one-time revision wouldincrease the burden by 17,712 hours.The Board estimates that, on acontinuing basis, the revision to the rulewould have a negligible effect on theannual burden. The total annual burdenfor the Regulation B information

collection is estimated to increase from157,538 to 175,250 hours.

Comments are invited on: (1) Whetherthe proposed collection of informationis necessary for the proper performanceof the Boards functions; includingwhether the information has practicalutility; (2) the accuracy of the Boardsestimate of the burden of the proposedinformation collection, including thecost of compliance; (3) ways to enhancethe quality, utility, and clarity of theinformation to be collected; and (4)ways to minimize the burden ofinformation collection on respondents,including through the use of automatedcollection techniques or other forms ofinformation technology. Comments onthe collection of information should besent to Cynthia Ayouch, Acting FederalReserve Clearance Officer, Division ofResearch and Statistics, Mail Stop 95A,Board of Governors of the FederalReserve System, Washington, DC 20551,with copies of such comments sent tothe Office of Management and Budget,Paperwork Reduction Project (71000202), Washington, DC 20503.

B. Regulatory Flexibility Act

The Regulatory Flexibility Act (RFA)(5 U.S.C. 601 et seq.) requires an agencyeither to provide an initial regulatoryflexibility analysis with a proposed ruleor certify that the proposed rule will nothave a significant economic impact ona substantial number of small entities.The proposed regulations cover certain

banks, other depository institutions, andnon-bank entities that take adverseaction against consumers. The SmallBusiness Administration (SBA)establishes size standards that definewhich entities are small businesses forpurposes of the RFA.3 The size standard

to be considered a small business is:$175 million or less in assets for banksand other depository institutions; and$7 million or less in annual revenues forthe majority of non-bank entities thatare likely to be subject to the proposedregulations. The Board requests publiccomment in the following areas.

http://www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdfhttp://www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdfhttp://www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdfhttp://www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdfhttp://www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdfhttp://www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdfhttp://www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdfhttp://www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdfhttp://www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdfhttp://www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdf


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13899Federal Register / Vol. 76, No. 50/ Tuesday, March 15, 2011 / Proposed Rules

4The estimate includes 1,504 institutionsregulated by the Board, 673 national banks, and4,167 Federally-chartered credit unions, asdetermined by the Board. The estimate alsoincludes 2,872 institutions regulated by the FDICand 369 thrifts regulated by the OTS. See 75 FR36016, 36020 (Jun. 24, 2010).

1. Reasons for the Proposed Rule

Section 1100F of the Dodd-Frank Actamends section 615(a) of the FCRA torequire persons to disclose a credit scoreand information relating to that creditscore in adverse action notices when theperson uses a credit score in takingadverse action. Specifically, a person

must disclose, in addition to theinformation currently required bysection 615(a) of the FCRA: (1) Anumerical credit score used in makingthe credit decision; (2) the range ofpossible scores under the model used;(3) the key factors that adverselyaffected the credit score of the consumerin the model used; (4) the date on whichthe credit score was created; and (5) thename of the person or entity thatprovided the credit score. The effectivedate of these amendments is July 21,2011.

Certain model notices in Regulation Binclude the content required by both the

ECOA and the FCRA adverse actionprovisions, so that creditors can use themodel notices to comply with theadverse action requirements of bothstatutes. The Board is issuing proposedamendments to the combined ECOAFCRA adverse action model notices inRegulation B pursuant to its existingauthority under section 703(a) of theECOA to facilitate compliance with thenew requirements under section 1100Fof the Dodd-Frank Act.

2. Statement of Objectives and LegalBasis

The SUPPLEMENTARY INFORMATIONabove contains this information. Thelegal basis for the proposed regulationsis section 703(a) of the ECOA. Theproposed regulations are consistent withsection 1100F of the Dodd-Frank Act.

3. Description of Small Entities toWhich the Regulation Applies

The proposed regulations apply toany person that (1) is required toprovide an adverse action notice to aconsumer; and (2) uses a credit score inmaking the credit decision requiring anadverse action notice. The total number

of small entities likely to be affected bythe proposal is unknown because theBoard does not have data on the numberof small entities that use credit scores intaking adverse action in connectionwith consumer credit. The adverseaction provisions of section 1100F of theDodd-Frank Act have broadapplicability to persons who use creditscores in taking adverse action inconnection with the provision ofconsumer credit.

Based on estimates compiled by theBoard, the Federal Deposit Insurance

Corporation, and the Office of ThriftSupervision, there are approximately9,585 depository institutions that could

be considered small entities and that arepotentially subject to the proposedrule.4 The available data are insufficientto estimate the number of non-bankentities that would be subject to theproposed rule and that are small as

defined by the SBA. Such entitieswould include non-bank mortgagelenders, auto finance companies,automobile dealers, other non-bankfinance companies, insurancecompanies, employers, telephonecompanies, and utility companies.

It also is unknown how many of thesesmall entities that meet the SBAs sizestandards and are potentially subject tothe proposed regulations use creditscores in taking adverse action inconnection with the provision ofconsumer credit. The proposedregulations do not impose any

requirements on small entities that donot use credit scores in taking adverseaction in connection with consumercredit.

The Board invites comment regardingthe number and type of small entitiesthat would be affected by the proposedrule.

4. Projected Reporting, Recordkeepingand Other Compliance Requirements

The compliance requirements of theproposed regulations are described indetail in the SUPPLEMENTARYINFORMATION above.

The proposed regulations generally

require a person that is required toprovide an adverse action notice to aconsumer and uses a credit score inmaking the credit decision to provide acredit score and information relating tothat credit score in the notice, inaddition to the information currentlyrequired by section 615(a) of the FCRA.A person is currently required todetermine if it takes an adverse action,

based in whole or in part on consumerreports, in connection with theprovision of consumer credit. If theperson does take adverse action basedon consumer reports, the person is

required to establish procedures foridentifying those consumers to whom itmust provide adverse action notices.

A person that is required to provideadverse action notices to certainconsumers would need to analyze theregulations. The person would need to

determine whether it uses credit scoresin taking adverse action against theconsumers to whom it must provideadverse action notices. Persons that usecredit scores in taking adverse actionwould need to provide a credit scoreand information relating to that creditscore to those consumers to whom itmust provide an adverse action notice,in addition to the information currentlyrequired by section 615(a) of the FCRA.Persons would need to design, generate,and provide notices, including a creditscore and information relating to thatcredit score, to the consumers to whomit must provide an adverse actionnotice.

The Board seeks information andcomment on any costs, compliancerequirements, or changes in operatingprocedures arising from the applicationof the proposed rule to smallinstitutions.

5. Identification of Duplicative,Overlapping, or Conflicting FederalRegulations

The Board has not identified anyFederal statutes or regulations thatwould duplicate, overlap, or conflictwith the proposed regulations. Asdiscussed in part III above, the proposedamendments to the adverse action rulesare consistent with section 1100F of theDodd-Frank Act. The Board is proposingthe rules pursuant to their existingauthority under section 703(a) of theECOA. The proposed amendments to

the adverse action model notices havebeen designed to work in conjunctionwith the requirements of section 1100Fof the Dodd-Frank Act to help facilitateuniform compliance when this section

becomes effective. The Board seekscomment regarding any statutes orregulations, including State or localstatutes or regulations, that wouldduplicate, overlap, or conflict with theproposed regulations.

6. Discussion of Significant Alternatives

The Board welcomes comments onany significant alternatives consistent

with section 703(a) of the ECOA and theprovisions of section 1100F of the Dodd-Frank Act that would minimize theimpact of the proposed regulations onsmall entities.

Text of Proposed Revisions

Certain conventions have been usedto highlight the proposed revisions.New language is shown insideflbold-type arrowsfi while language thatwould be deleted is set off with .



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List of Subjects in 12 CFR Part 202

Aged, Banks, Banking, Civil Rights,Consumer protection, Credit,Discrimination, Federal Reserve System,Marital Status Discrimination, Penalties,Religious Discrimination, Reporting andrecordkeeping requirements, SexDiscrimination.

For the reasons set forth in thepreamble, the Board proposes to amend12 CFR part 202 and the Official StaffCommentary, as follows:

PART 202EQUAL CREDITOPPORTUNITY ACT (REGULATION B)

1. The authority citation for part 202continues to read as follows:

Authority: 15 U.S.C. 1693b.

2. Appendix C to Part 202 is amendedby revising paragraph 2 and FormsC1 through C5 to read as follows:

Appendix C to Part 202SampleNotification Forms

* * * * *2. Form C1 contains the Fair Credit

Reporting Act disclosure as required bysections 615(a) and (b) of that act. Forms C2 through C5 contain only the section 615(a)disclosure (that a creditor obtainedinformation from a consumer reportingagency that flwasconsideredfi in the credit decisionfland, asapplicable, a credit score used in takingadverse action along with relatedinformationfi). A creditor must provide thesection 615(a) disclosure when adverseaction is taken against a consumer based oninformation from a consumer reportingagency. A creditor must provide the section615(b) disclosure when adverse action istaken based on information from an outsidesource other than a consumer reportingagency. In addition, a creditor must providethe section 615(b) disclosure if the creditorobtained information from an affiliate otherthan information in a consumer report orother than information concerning theaffiliates own transactions or experienceswith the consumer. Creditors may complywith the disclosure requirements for adverseaction based on information in a consumerreport obtained from an affiliate by providingeither the section 615(a) or section 615(b)disclosure.

* * * * *Form C1Sample Notice of Action Takenand Statement of Reasons Statement of CreditDenial, Termination or Change

Date: llllllllllllllllllApplicants Name: llllllllllllApplicants Address: lllllllllll

Description of Account, Transaction, orRequested Credit:lllllllllllllllllllll

lllllllllllllllllllll

Description of Action Taken:lllllllllllllllllllll


Part IPrincipal Reason(s) for Credit Denial,Termination, or Other Action TakenConcerning Credit

This section must be completed in allinstances.

llCredit application incompletellInsufficient number of credit referencesprovidedllUnacceptable type of credit references

providedllUnable to verify credit referencesllTemporary or irregular employmentllUnable to verify employmentllLength of employmentllIncome insufficient for amount of creditrequestedllExcessive obligations in relation toincomellUnable to verify incomellLength of residencellTemporary residencellUnable to verify residencellNo credit filellLimited credit experiencellPoor credit performance with usllDelinquent past or present creditobligations with othersllCollection action or judgmentllGarnishment or attachmentllForeclosure or repossessionllBankruptcyllNumber of recent inquiries on creditbureau reportllValue or type of collateral not sufficientllOther, specify: llllllllll llllllllll

Part IIDisclosure of Use of InformationObtained From an Outside Source

This section should be completed if thecredit decision was based in whole or in parton information that has been obtained froman outside source.

llOur credit decision was based in

whole or in part on information obtained ina report from the consumer reporting agencylisted below. You have a right under the FairCredit Reporting Act to know the informationcontained in your credit file at the consumerreporting agency. The reporting agencyplayed no part in our decision and is unableto supply specific reasons why we havedenied credit to you. You also have a rightto a free copy of your report from thereporting agency, if you request it no laterthan 60 days after you receive this notice. Inaddition, if you find that any informationcontained in the report you receive isinaccurate or incomplete, you have the rightto dispute the matter with the reportingagency.

Name: lllllllllllllllllAddress: llllllllllllllll[Toll-free] Telephone number: llllll

fl[We also obtained your credit score fromthis consumer reporting agency and used itin making our credit decision. Your creditscore is a number that reflects theinformation in your credit report. Your creditscore can change, depending on how theinformation in your credit report changes.

Your credit score: llllllllllllDate: llllllllllllllllllScores range from a low of llllllllto a high of lllllllllllllll

Key factors that adversely affected yourcredit score:lllllllllllllllllllll




[Number of recent inquiries on creditreport]]fi

llOur credit decision was based inwhole or in part on information obtained

from an affiliate or from an outside sourceother than a consumer reporting agency.Under the Fair Credit Reporting Act, youhave the right to make a written request, nolater than 60 days after you receive thisnotice, for disclosure of the nature of thisinformation.

If you have any questions regarding thisnotice, you should contact:

Creditors name: lllllllllllllCreditors address: llllllllllllCreditors telephone number: lllllll

Notice: The Federal Equal CreditOpportunity Act prohibits creditors fromdiscriminating against credit applicants onthe basis of race, color, religion, nationalorigin, sex, marital status, age (provided theapplicant has the capacity to enter into a

binding contract); because all or part of theapplicants income derives from any publicassistance program; or because the applicanthas in good faith exercised any right underthe Consumer Credit Protection Act. TheFederal agency that administers compliancewith this law concerning this creditor is(name and address as specified by theappropriate agency listed in appendix A).

Form C2Sample Notice of Action Takenand Statement of Reasons

Date

Dear Applicant: Thank you for your recentapplication. Your request for [a loan/a creditcard/an increase in your credit limit] was

carefully considered, and we regret that weare unable to approve your application at thistime, for the following reason(s):

Your Income:llis below our minimum requirement.llis insufficient to sustain payments on theamount of credit requested.llcould not be verified.

Your Employment:llis not of sufficient length to qualify.llcould not be verified.

Your Credit History:llof making payments on time was notsatisfactory.llcould not be verified.Your Application:ll

lacks a sufficient number of creditreferences.lllacks acceptable types of creditreferences.llreveals that current obligations areexcessive in relation to income.Other: lllllllllllllllll

The consumer reporting agency contactedthat provided information that influencedour decision in whole or in part was [name,address and [toll-free] telephone number ofthe reporting agency]. The reporting agencyplayed no part in our decision and is unableto supply specific reasons why we havedenied credit to you. You have a right under



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13901Federal Register / Vol. 76, No. 50/ Tuesday, March 15, 2011 / Proposed Rules

the Fair Credit Reporting Act to know theinformation contained in your credit file atthe consumer reporting agency. You alsohave a right to a free copy of your report fromthe reporting agency, if you request it no laterthan 60 days after you receive this notice. Inaddition, if you find that any informationcontained in the report you receive isinaccurate or incomplete, you have the rightto dispute the matter with the reporting

agency. Any questions regarding suchinformation should be directed to [consumerreporting agency]. If you have any questionsregarding this letter, you should contact us at[creditors name, address and telephonenumber].fl[We also obtained your credit score from

this consumer reporting agency and used itin making our credit decision. Your creditscore is a number that reflects theinformation in your credit report. Your creditscore can change, depending on how theinformation in your credit report changes.








binding contract); because all or part of theapplicants income derives from any public

assistance program; or because the applicanthas in good faith exercised any right underthe Consumer Credit Protection Act. TheFederal agency that administers compliancewith this law concerning this creditor is(name and address as specified by theappropriate agency listed in appendix A).

Form C3Sample Notice of Action Takenand Statement of Reasonsfl[(CreditScoring)]fi

Date

Dear Applicant: Thank you for your recentapplication forllllllll. We regretthat we are unable to approve your request.

fl[Reasons for Denial of Credit]fi

Your application was processed by a

fl[ficredit scoringfl]fi system that assignsa numerical value to the various items ofinformation we consider in evaluating anapplication. These numerical values are

based upon the results of analyses ofrepayment histories of large numbers ofcustomers.

The information you provided in yourapplication did not score a sufficient numberof points for approval of the application. Thereasons you did not score well comparedwith other applicants were:

Insufficient bank references Type of occupation Insufficient credit experience

Number of recent inquiries on creditbureau report

fl[Your Right to Get Your Credit Report]fi

In evaluating your application theconsumer reporting agency listed belowprovided us with information that in wholeor in part influenced our decision. Theconsumer reporting agency played no part inour decision and is unable to supply specificreasons why we have denied credit to you.You have a right under the Fair CreditReporting Act to know the informationcontained in your credit file at the consumerreporting agency. It can be obtained bycontacting: [name, address, and [toll-free]telephone number of the consumer reportingagency]. You also have a right to a free copyof your report from the reporting agency, ifyou request it no later than 60 days after youreceive this notice. In addition, if you findthat any information contained in the reportyou receive is inaccurate or incomplete, youhave the right to dispute the matter with thereporting agency.

fl[Information about Your Credit Score

We also obtained your credit score from

this consumer reporting agency and used itin making our credit decision. Your creditscore is a number that reflects theinformation in your credit report. Your creditscore can change, depending on how theinformation in your credit report changes.






[Number of recent inquiries on credit

report]]fiIf you have any questions regarding this

letter, you should contact us at

Creditors Name: lllllllllllllAddress: lllllllllllllllllllllllllllllllllllll

Telephone: lllllllllllllll

Sincerely,

Notice: The Federal Equal CreditOpportunity Act prohibits creditors fromdiscriminating against credit applicants onthe basis of race, color, religion, nationalorigin, sex, marital status, age (with certainlimited exceptions); because all or part of theapplicants income derives from any publicassistance program; or because the applicant

has in good faith exercised any right underthe Consumer Credit Protection Act. TheFederal agency that administers compliancewith this law concerning this creditor is(name and address as specified by theappropriate agency listed in appendix A).

Form C4Sample Notice of Action Taken,Statement of Reasons and Counteroffer

Date

Dear Applicant: Thank you for yourapplication forllllllll. We areunable to offer you credit on the terms thatyou requested for the following reason(s):lllllllllllllllllllll

We can, however, offer you credit on thefollowing terms:lllllllllllllllllllllllllllll

If this offer is acceptable to you, pleasenotify us within [amount of time] at thefollowing address:llllllll.

Our credit decision on your applicationwas based in whole or in part on informationobtained in a report from [name, address and[toll-free] telephone number of the consumer

reporting agency]. You have a right under theFair Credit Reporting Act to know theinformation contained in your credit file atthe consumer reporting agency. The reportingagency played no part in our decision and isunable to supply specific reasons why wehave denied credit to you. You also have aright to a free copy of your report from thereporting agency, if you request it no laterthan 60 days after you receive this notice. Inaddition, if you find that any informationcontained in the report you receive isinaccurate or incomplete, you have the rightto dispute the matter with the reportingagency.fl[We also obtained your credit score from

this consumer reporting agency and used it

in making our credit decision. Your creditscore is a number that reflects theinformation in your credit report. Your creditscore can change, depending on how theinformation in your credit report changes.






[Number of recent inquiries on credit

report]]fi

You should know that the Federal EqualCredit Opportunity Act prohibits creditors,such as ourselves, from discriminatingagainst credit applicants on the basis of theirrace, color, religion, national origin, sex,marital status, age (provided the applicanthas the capacity to enter into a bindingcontract), because they receive income froma public assistance program, or because theymay have exercised their rights under theConsumer Credit Protection Act. If you

believe there has been discrimination inhandling your application you shouldcontact the [name and address of theappropriate Federal enforcement agencylisted in appendix A].

Sincerely,Form C5Sample Disclosure of Right toRequest Specific Reasons for Credit Denial

Date

Dear Applicant: Thank you for applying tous forllllllll.

After carefully reviewing your application,we are sorry to advise you that we cannot[open an account for you/grant a loan to you/increase your credit limit] at this time. If youwould like a statement of specific reasonswhy your application was denied, pleasecontact [our credit service manager] shown

below within 60 days of the date of this



7/7


letter. We will provide you with thestatement of reasons within 30 days afterreceiving your request.

Creditors Name lllllllllllllAddress llllllllllllllllTelephone Number lllllllllll

If we obtained information from aconsumer reporting agency as part of ourconsideration of your application, its name,

address, and [toll-free] telephone number isshown below. The reporting agency playedno part in our decision and is unable tosupply specific reasons why we have deniedcredit to you. [You have a right under theFair Credit Reporting Act to know theinformation contained in your credit file atthe consumer reporting agency.] You have aright to a free copy of your report from thereporting agency, if you request it no laterthan 60 days after you receive this notice. Inaddition, if you find that any informationcontained in the report you received isinaccurate or incomplete, you have the rightto dispute the matter with the reportingagency. You can find out about theinformation contained in your file (if one was

used) by contacting:Consumer reporting agencys nameAddress[Toll-free] Telephone number

fl[We also obtained your credit score fromthis consumer reporting agency and used itin making our credit decision. Your creditscore is a number that reflects theinformation in your credit report. Your creditscore can change, depending on how theinformation in your credit report changes.

Your credit score: llllllllllllDate: llllllllllllllllllScores range from a low of________ to a highof________

Key factors that adversely affected yourcredit score:






Sincerely,


binding contract); because all or part of theapplicants income derives from any publicassistance program; or because the applicant

has in good faith exercised any right underthe Consumer Credit Protection Act. TheFederal agency that administers compliancewith this law concerning this creditor is(name and address as specified by theappropriate agency listed in appendix A).

* * * * *3. Supplement I to part 202 is

amended by revising paragraph 9(b)(2)9 to read as follows:

Supplement I to Part 202Official StaffInterpretations

* * * * *

Section 202.9Notifications

* * * * *

Paragraph 9(b)(2)

* * * * *9. Combined ECOAFCRA disclosures. The

ECOA requires disclosure of the principalreasons for denying or taking other adverseaction on an application for an extension ofcredit. The Fair Credit Reporting Act (FCRA)

requires a creditor to disclose when it hasbased its decision in whole or in part oninformation from a source other than theapplicant or its own files. Disclosing that acredit report was obtained and used in thedenial of the application, as the FCRArequires, does not satisfy the ECOArequirement to disclose specific reasons. Forexample, if the applicants credit historyreveals delinquent credit obligations and theapplication is denied for that reason, tosatisfy 202.9(b)(2) the creditor mustdisclose that the application was denied

because of the applicants delinquent creditobligations.flThe FCRA also requires acreditor to disclose, as applicable, a creditscore it used in taking adverse action along

with related information, including the keyfactors that adversely affected the consumerscredit score. Disclosing the key factors thatadversely affected the consumers creditscore does not satisfy the ECOA requirementto disclose specific reasons for denying ortaking other adverse action on an applicationor extension of credit.fi Sample forms C1 through C5 of AppendixC of the regulation provide for the twodisclosures. See also comment 9(a)(2)1.

* * * * *

By order of the Board of Governors of the

Federal Reserve System, March 1, 2011.Jennifer J. Johnson,

Secretary of the Board.

[FR Doc. 20115417 Filed 31411; 8:45 am]

BILLING CODE 621001P

FEDERAL RESERVE SYSTEM

12 CFR Part 222

[Regulation V; Docket No. R1407]

RIN 7100AD66

FEDERAL TRADE COMMISSION

16 CFR Parts 640 and 698RIN R411009

Fair Credit Reporting Risk-BasedPricing Regulations

AGENCIES: Board of Governors of theFederal Reserve System (Board) andFederal Trade Commission(Commission).ACTION: Notice of proposed rulemaking.

SUMMARY: On January 15, 2010, theBoard and the Commission published

final rules to implement the risk-basedpricing provisions in section 311 of theFair and Accurate Credit TransactionsAct of 2003 (FACT Act), which amendsthe Fair Credit Reporting Act (FCRA).The final rules generally require acreditor to provide a risk-based pricingnotice to a consumer when the creditoruses a consumer report to grant or

extend credit to the consumer onmaterial terms that are materially lessfavorable than the most favorable termsavailable to a substantial proportion ofconsumers from or through thatcreditor. The Board and the Commissionpropose to amend their respective risk-

based pricing rules to require disclosureof credit scores and information relatingto credit scores in risk-based pricingnotices if a credit score of the consumeris used in setting the material terms ofcredit. These proposed amendmentsreflect the new requirements in section615(h) of the FCRA that were added by

section 1100F of the Dodd-Frank WallStreet Reform and Consumer ProtectionAct.

DATES: Comments must be received onor before April 14, 2011. Comments onthe Paperwork Reduction Act analysisset forth in Section III.A. of this FederalRegister notice must be received on or

before May 16, 2011.

ADDRESSES: All comments will becomea matter of public record.

Comments should be addressed to:Board: You may submit comments,

identified by Docket No. R1407 andRIN No. RIN 7100AD66, by any of the

following methods: Agency Web Site: http://

www.federalreserve.gov.Follow theinstructions for submitting commentson the http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm.

Federal eRulemaking Portal: http://www.regulations.gov.Follow theinstructions for submitting comments.

E-mail:[email protected] docket number in the subjectline of the message.

FAX: 2024523819 or 2024523102.

Mail:Jennifer J. Johnson, Secretary,Board of Governors of the FederalReserve System, 20th Street andConstitution Avenue, NW., Washington,DC 20551. All public comments areavailable from the Boards Web site athttp://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfmassubmitted, unless modified for technicalreasons. Accordingly, your commentswill not be edited to remove anyidentifying or contact information.Public comments may also be viewedelectronically or in paper in Room MP

http://www.federalreserve.gov/http://www.federalreserve.gov/http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfmhttp://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfmhttp://www.regulations.gov/http://www.regulations.gov/mailto:[email protected]://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfmhttp://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfmhttp://www.regulations.gov/http://www.regulations.gov/http://www.federalreserve.gov/http://www.federalreserve.gov/mailto:[email protected]://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfmhttp://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfmhttp://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfmhttp://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm

Federal Reserve Board: Equal Credit Opportunity - Regulation B

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Transcript of Federal Reserve Board: Equal Credit Opportunity - Regulation B