Question & Answer

Question: I'm having trouble sorting something out. In April 1998, the FRB revised its model adverse action forms to include language required by changes to Fair Credit Reporting. The FRB's document refers to those changes as taking place in 1997. I am aware of the 1996 law that changed FCRA, but I seem to have missed anything in 1997. Can you help me with this?

Answer: We'll try. This is more than a little confusing. First, start with the fact that the FRB's model adverse action forms include language to comply with FCRA as well as with Regulation B (ECOA). The FRB combined these notices to provide creditors with a model for a single notice form that included compliance with both laws. Both ECOA and FCRA contain adverse action notice requirements, although the triggering conditions are somewhat different. In issuing Regulation B, the FRB tried to simplify things for creditors by illustrating how to combine the notices into one form.

Then, in September 1996, Congress changed FCRA and the change included revisions to the FCRA notices. This change took final effect one year later, September 30, 1997. When this change took final effect, it rendered the model forms in Regulation B obsolete. So the FRB took action to bring their forms up to date. Their final version was issued this past spring.

There was no change to ECOA or to Regulation B that was connected to this revision of the model forms. But using the new model forms in Regulation B ensures compliance with the September 1997 changes to FCRA.

Copyright © 1998 Compliance Action. Originally appeared in Compliance Action, Vol. 3, No. 11, 8/98