Can web applicants receive web adverse action notices?

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Question:

We have established a web based loan origination system whereby loan applications are taken over the web. In this case is it permissable to send Adverse Action Letters over the web or must they go through the mail?

Answer:

Answer by Andy Zavoina, BOL Guru

If you send them via the Internet, E-Sign requirements would have to be complied with.

Reg. B allows electronic communications in connection with an application under 202.17(c), but adverse actions under 202.9(a) are not included.

Answer:

Answer by Richard Insley, BOL Guru

Section 202.9(a)(2) indicates that notifications of adverse action must be "in writing." Since the addition of Section 202.17 in April 2001, creditors have been permitted to substitute "electronic communication" in place of paper; however, to claim this option you must obtain the consumers prior consent. Consent is obtained in the manner prescribed by ESIGN, including disclosures and an opt-in process that demonstrates success with the medium. As a practical matter, consent for e-communication of the notice of action taken should be obtained at the time the application is submitted. First published on BankersOnline.com 3/17/03