FRB Issues Final Notification Forms

The Federal Reserve Board has issued revisions to the forms in Appendix A to Regulation B to be used for providing combined adverse action notices under the Equal Credit Opportunity and Fair Credit Opportunity Acts. The revised forms provide compliance guidance for notifications that are consistent with the additional FCRA disclosures that were added through the Economic Growth and Regulatory Paperwork Reduction Act of 1996. Although the Federal Trade Commission has interpretive responsibility under the FCRA, the FRB has developed these combined notification forms to promote compliance.

The new forms provide straightforward guidance on compliance. Because both ECOA and FCRA are explicit in what must be included in the notice, there is not a great deal of room for regulatory creativity. However, the FRB has taken one step to facilitate compliance (and reduce confusion.) The issue involves information obtained from an affiliate that is neither a consumer report nor the affiliate's own experience with the customer. The third party notices have slightly different timing requirements than the affiliate notices. The time frame for requesting reasons based on information from a third party is 60 days after the consumer receives the notice. The time frame for requesting reasons involving information from an affiliate is 60 days after the transmittal of the notice. The FRB has concluded that using the time frame of 60 days from the consumer's receipt of notice would simplify compliance and be easier for consumers to understand.

One issue has been deferred to the Federal Trade Commission as the lead agency for the FCRA. That involves how to disclose the use of a consumer report obtained by an affiliate. The question is whether the disclosure should indicate that the infor-mation was obtained from the credit bureau or obtained from the affiliate. The comments contained strong disagreement on the right approach. The FRB expects to issue a joint rule with the FTC in the foreseeable future. The notices take effect on April 30, 1998.

Copyright © 1998 Compliance Action. Originally appeared in Compliance Action, Vol. 3 , No. 5 & 6, 4/98