My Compliance Team wants me to implement Fair Lending testing for credit card billing errors to demonstrate that there is no disparate treatment of our customers regarding the resolution of their billing error dispute. They are stating that because Reg B (1002.2(m)) defines a credit transaction to include an "investigative procedure" that this includes the billing error process defined in Reg Z (1026.13). I have pushed back stating that the Reg B investigative procedures is to determine the applicants credit worthiness. This involves gathering and assessing information about the applicant's credit history, financial status, and other relevant factors to make a decision. Further, Reg Z does not identify a billing error as a credit card transaction and because it is not a credit card transaction, Reg B doesn't apply and there is no Fair Lending test I need to do.

I need some help here. Am I seeing this correctly?

(m) Credit transaction means every aspect of an applicant's dealings with a creditor regarding an application for credit or an existing extension of credit (including, but not limited to, information requirements; investigation procedures; standards of creditworthiness; terms of credit; furnishing of credit information; revocation, alteration, or termination of credit; and collection procedures).

What about that doesn't include billing errors? If you are processes errors faster to white people or denying claims because the customer is black for existing account, I definitely think there would be a Reg B violation. I do think billing errors fall under the investigation procedures, but even if you don't, the language clearly states every aspect, and the list is not exhaustive.

Whether you need to do any FL analysis on billing errors is a business decision, but I certainly think Reg B applies to them.

Thanks for your reply and thoughts.

How do you plan to select the race, sex and ethnicity? Will you be using surrogates?

Servicing of credit card accounts is covered under ECOA and Regulation B. This includes billing error investigations.