[Federal Register Volume 76, Number 50 (Tuesday, March 15, 2011)]
[Proposed Rules]
[Pages 13896-13902]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-5417]


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FEDERAL RESERVE SYSTEM

12 CFR Part 202

[Regulation B; Docket No. R-1408]
RIN No. 7100-AD67


Equal Credit Opportunity

AGENCY: Board of Governors of the Federal Reserve System (Board).

ACTION: Notice of proposed rulemaking.

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SUMMARY: Section 701 of the Equal Credit Opportunity Act (ECOA) 
requires a creditor to notify a credit applicant when it has taken 
adverse action against the applicant. The ECOA adverse action 
requirements are implemented in the Board's Regulation B. Section 
615(a) of the Fair Credit Reporting Act (FCRA) also requires a person 
to provide a notice when the person takes an adverse action against a 
consumer based in whole or in part on information in a consumer report. 
Certain model notices in Regulation B include the content required by 
both the ECOA and the FCRA adverse action provisions, so that creditors 
can use the model notices to comply with the adverse action 
requirements of both statutes. The Board proposes to amend these model 
notices in Regulation B to include the disclosure of credit scores and 
information relating to credit scores if a credit score is used in 
taking adverse action. These proposed amendments reflect the new 
content requirements in section 615(a) of the FCRA that were added by 
section 1100F of the Dodd-Frank Wall Street Reform and Consumer 
Protection Act.

DATES: Comments must be received on or before April 14, 2011. Comments 
on the Paperwork Reduction Act analysis set forth in Section III.A. of 
this Federal Register notice must be received on or before May 16, 
2011.

ADDRESSES: You may submit comments, identified by Docket No. R-1408, by 
any of the following methods:
     Agency Web Site: http://www.federalreserve.gov. Follow the 
instructions for submitting comments on the http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm.
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     E-mail: regs.comments@federalreserve.gov. Include docket 
number in the subject line of the message.
     FAX: 202-452-3819 or 202-452-3102.
     Mail: Jennifer J. Johnson, Secretary, Board of Governors 
of the Federal Reserve System, 20th Street and Constitution Avenue, 
NW., Washington, DC 20551.
    All public comments are available from the Board's Web site at 
http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm as 
submitted, unless modified for technical reasons. Accordingly, your 
comments will not be edited to remove any identifying or contact 
information. Public comments may also be viewed electronically or in 
paper in Room MP-500 of the Board's Martin Building (20th and C 
Streets, NW.) between 9 a.m. and 5 p.m. on weekdays.

FOR FURTHER INFORMATION CONTACT: Board: Mandie K. Aubrey, Senior 
Attorney, or Catherine Henderson, Attorney, Division of Consumer and 
Community Affairs, (202) 452-3667 or (202) 452-2412, Board of Governors 
of the Federal Reserve System, 20th and C Streets, NW., Washington, DC 
20551. For users of a Telecommunications Device for the Deaf (TDD) 
only, contact (202) 263-4869.

SUPPLEMENTARY INFORMATION:

I. Background

    The Equal Credit Opportunity Act (ECOA), 15 U.S.C. 1691 et seq., 
makes it unlawful for creditors to discriminate in any aspect of a 
credit transaction on the basis of sex, race, color, religion, national 
origin, marital status, or age (provided the applicant has the capacity 
to contract), because all or part of an applicant's income derives from 
public assistance, or because an applicant has in good faith exercised 
any right under the Consumer Credit Protection Act. The Board's 
Regulation B (12 CFR part 202) implements the ECOA.
    Section 701(d) of the ECOA generally requires a creditor to notify 
a credit applicant against whom it has taken an adverse action. Under 
section 701(d)(6) of the ECOA, an adverse action generally means a 
denial or revocation of credit, a change in the terms of an existing 
credit arrangement, or a refusal to grant credit in substantially the 
amount or on substantially the terms requested.
    Section 615(a) of the FCRA also requires a person to provide an 
adverse action notice when the person takes an adverse action based in 
whole or in part on information in a consumer report. The definition of 
adverse action in section 603(k) of the FCRA incorporates, for purposes 
of credit transactions, the definition of adverse action under ECOA. 
The adverse action provisions in both the ECOA and the FCRA require 
certain disclosures to be given to consumers.
    The ECOA adverse action provisions are implemented in Regulation B. 
There are no implementing regulations for the adverse action 
requirements of section 615(a) of the FCRA. However, as explained in 
comment 202.9(b)(2)-9 of Regulation B, certain model notices in 
Regulation B include the content required by both the ECOA and the 
FCRA, so that persons can use the model notices to comply with the 
adverse action requirements of both statutes.
    On July 21, 2010, the Dodd-Frank Wall Street Reform and Consumer 
Protection Act (Dodd-Frank Act) was signed into law. Public Law 111-
203, 124 Stat. 1376. Section 1100F of the Dodd-Frank Act amends section 
615(a) of the FCRA to require creditors to disclose on FCRA adverse 
action notices a credit score used in taking any adverse action and 
information relating to that score. The effective date of these 
amendments is July 21, 2011.\1\
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    \1\ Section 1100H of the Dodd-Frank Act provides that the 
amendments in Subtitle H of Title X, which includes Section 1100F, 
become effective on the ``designated transfer date.'' The Secretary 
of the Treasury set the designated transfer date as July 21, 2011. 
75 FR 57252 (Sept. 20, 2010).
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    The Board is proposing to amend those model adverse action notices 
in Regulation B which incorporate the content requirements of section 
615(a) of the FCRA to reflect the new content requirements added by 
section 1100F of the Dodd-Frank Act. These revisions to the model 
notices will help facilitate uniform compliance when section 1100F of 
the Dodd-Frank Act becomes effective. Thus, pursuant to its authority

[[Page 13897]]

in section 703(a) of the ECOA, the Board is proposing to amend certain 
adverse action model notices in Regulation B consistent with the 
requirements of section 1100F of the Dodd-Frank Act.

II. Section-by-Section Analysis

Appendix C to Part 202--Sample Notification Forms

    Under section 701(d) of the ECOA, a creditor must provide to 
applicants against whom adverse action is taken either: (1) A statement 
of reasons for taking the adverse action as a matter of course; or (2) 
a notification of adverse action which discloses the applicant's right 
to a statement of reasons within thirty days after receipt by the 
creditor of a request made by the applicant within sixty days after the 
written notification. Section 615(a) of the FCRA requires a person to 
provide in an adverse action notice information regarding the consumer 
reporting agency that furnished the consumer report used in taking the 
adverse action. It also requires a person to disclose that a consumer 
has a right to a free credit report and right to dispute the accuracy 
or completeness of any information in a consumer report.
    Section 1100F of the Dodd-Frank Act amends section 615(a) of the 
FCRA to require that creditors disclose additional information on FCRA 
adverse action notices. Specifically, a person must disclose on a FCRA 
adverse action notice a credit score used in taking any adverse action 
and information relating to that score, in addition to the information 
currently required by section 615(a) of the FCRA. The statute generally 
requires that the FCRA adverse action notice include: (1) A numerical 
credit score used in making the credit decision; (2) the range of 
possible scores under the model used; (3) the key factors that 
adversely affected the credit score of the consumer in the model used; 
(4) the date on which the credit score was created; and (5) the name of 
the person or entity that provided the credit score.
    As explained in paragraph 2 of Appendix C to part 202, model 
notices C-1 through C-5 may be used to comply with the adverse action 
provisions of both the ECOA and the FCRA. The Board proposes to amend 
model notices C-1 through C-5 to incorporate the additional content 
requirements prescribed by section 1100F of the Dodd-Frank Act.
    Under the proposal, Forms C-1 through C-5 would be revised to 
include, as applicable, a statement that the creditor obtained the 
consumer's credit score from a consumer reporting agency named in the 
notice and used the score in making the credit decision. The notice 
would also state that a credit score is a number that reflects the 
information in the consumer's credit report and that the consumer's 
credit score can change, depending on how the information in the 
consumer's credit report changes. The model notices would also provide 
space for the creditor to include the content required under section 
1100F of the Dodd-Frank Act that is specific to the consumer. This 
content includes: the consumer's credit score, the date the credit 
score was created, the range of possible credit scores under the model 
used, and up to four key factors that adversely affected the consumer's 
credit score (or up to five factors if the number of enquiries made 
with respect to that consumer report is one of the factors).
    In addition to the content added to each of Forms C-1 through C-5, 
Form C-3 would be amended for clarity. Form C-3 is a model notice that 
can be used by creditors in circumstances where the creditor uses a 
proprietary credit scoring system to make a credit decision and where 
the creditor uses information from a consumer reporting agency in this 
scoring evaluation. As discussed above, section 1100F of the Dodd-Frank 
Act requires information regarding a credit score that is obtained from 
a consumer reporting agency to be included on an adverse action notice. 
The Board believes discussing two different types of credit scoring 
systems on Form C-3 could be confusing for consumers. Therefore, the 
Board proposes to amend Form C-3 to clarify the differences between a 
proprietary score and a credit score that is obtained from a consumer 
reporting agency. The text would clarify that the consumer's 
application was processed by a system that assigns a numerical value to 
the various items of information the creditor considers when evaluating 
the consumer's application. This numerical value is based upon analyses 
of repayment histories of the creditor's customers. The proposed form 
would also add topic headings to help distinguish the different types 
of scores that were used in making the credit decision. It would also 
remove the reference to credit scoring in the title of the form.
    In some cases, a person who is required to provide an adverse 
action notice under the FCRA may use a consumer report, but not a 
credit score, in taking the adverse action. Under section 1100F of the 
Dodd-Frank Act, a person is not required to disclose a credit score and 
related information if a credit score is not used in taking the adverse 
action. Therefore, the amendments to Forms C-1 through C-5 are only 
applicable if a credit score is used in taking an adverse action. A 
person may amend, at its option, Form C-3 to add the additional 
headings and remove the reference to a credit scoring system, even if 
the person does not add the heading and information about the 
consumer's credit score.
    The Board notes that section 1100F of the Dodd-Frank Act requires a 
creditor to provide, if applicable, a consumer's credit score and 
related information, regardless of whether it provides a statement of 
specific reasons for taking the adverse action or a disclosure of the 
applicant's right to a statement of specific reasons for an adverse 
action. Therefore, a creditor would not comply with the FCRA adverse 
action provisions by providing the required FCRA disclosures only if a 
consumer responds to a request for a statement of specific reasons for 
an adverse action. As a result, proposed Form C-5 reflects the 
requirement to provide the disclosures required by section 615(a) of 
the FCRA, including the consumer's credit score and the key factors 
that adversely affected the credit score, at the time a creditor 
provides a disclosure of the applicant's right to a statement of 
specific reasons for an adverse action.
    The Board requests comment on whether the proposed revisions to the 
content of the adverse action model notices are appropriate. The Board 
also solicits comment on whether additional or different changes to the 
model notices should be adopted.
    The Board also proposes to amend paragraph 2 of Appendix C, which 
discusses the disclosure requirements of section 615 of the FCRA that 
are contained in Forms C-1 through C-5. Paragraph 2 explains that Form 
C-1 contains the disclosures required by sections 615(a) and (b) of the 
FCRA, and Forms C-2 through C-5 contain only disclosures required by 
section 615(a) of the FCRA. Paragraph 2 also describes the 
circumstances under which a creditor must provide the section 615(a) 
disclosures or the section 615(b) disclosures.
    The paragraph states that the combined ECOA-FCRA disclosures in 
Form C-1 through Form C-5 must state that a creditor obtained 
information from a consumer reporting agency. Consistent with section 
1100F of the Dodd-Frank Act, the paragraph would be revised to state 
that the combined disclosure must also include, as applicable, a credit 
score used in taking adverse action along with related information. The 
paragraph would also be revised to clarify that information

[[Page 13898]]

from a consumer reporting agency was considered in the credit decision.

Supplement I to Part 202--Official Staff Interpretations

    The Board proposes to amend comment 9(b)(2)-9 to reflect the 
proposed changes to the adverse action model notices. Comment 9(b)(2)-9 
addresses the combined ECOA-FCRA adverse action disclosures. The 
proposed amendment would clarify that the FCRA requires a creditor to 
disclose, as applicable, a credit score it used in taking adverse 
action along with related information, including the key factors that 
adversely affected the consumer's credit score. It would also eliminate 
a statement that is redundant.
    The proposed amendment to comment 9(b)(2)-9 would also clarify that 
disclosing the key factors that adversely affected the consumer's 
credit score does not satisfy the ECOA requirement to disclose specific 
reasons for denying or taking other adverse action on an application or 
extension of credit. The Board recognizes that a key factor(s) that 
adversely affected the consumer's credit score may be the same as a 
specific reason(s) for denying credit or taking other adverse action. 
However, some specific reasons for taking adverse action may be 
unrelated to a consumer's credit score, such as reasons related to the 
consumer's income, employment, or residency. Therefore, the Board 
believes the disclosure of both the key factors that adversely affected 
the consumer's credit score and the specific reasons for denying credit 
or taking other adverse action is necessary to fulfill the separate 
requirements of the ECOA and the FCRA.

III. Regulatory Analysis

A. Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995 (PRA) (44 
U.S.C. 3506; 5 CFR part 1320 Appendix A.1), the Board reviewed the 
proposed rulemaking under the authority delegated to the Board by the 
Office of Management and Budget (OMB). The collection of information 
that is required by this proposed rulemaking is found in 12 CFR 202. In 
addition, as permitted by the PRA, the Board also proposes to extend 
for three years the current recordkeeping and disclosure requirements 
in connection with Regulation B. The Board may not conduct or sponsor, 
and an organization is not required to respond to, this information 
collection unless it displays a currently valid OMB control number. The 
OMB control number is 7100-0201.
    Section 703(a)(1) of the Equal Credit Opportunity Act (15 U.S.C. 
1691b(a)(1)) authorizes the Board to issue regulations to carry out the 
provisions of the Act. The purpose of the Act is to ensure that credit 
is made available to all creditworthy customers without discrimination 
on the basis of race, color, religion, national origin, sex, marital 
status, age (provided the applicant has the capacity to contract), 
receipt of public assistance income, or the fact that the applicant has 
in good faith exercised any right under the Consumer Credit Protection 
Act (15 U.S.C. 1600 et seq.). This information collection is mandatory.
    Regulation B applies to all types of creditors, not just State 
member banks. However, under the Paperwork Reduction Act, the Board 
accounts for the burden of the paperwork associated with the regulation 
only for entities that are supervised by the Board. Appendix A of 
Regulation B defines these creditors as State member banks, branches 
and agencies of foreign banks (other than Federal branches, Federal 
agencies, and insured state branches of foreign banks), commercial 
lending companies owned or controlled by foreign banks, and 
organizations operating under section 25 or 25A of the Federal Reserve 
Act. Other Federal agencies account for the paperwork burden for the 
institutions they supervise. Creditors are required to retain records 
for 12 to 25 months as evidence of compliance.
    The current annual burden to comply with the provisions of 
Regulation B is estimated to be 157,538 hours for the 1,107 
institutions \2\ supervised by the Board that are deemed to be 
respondents for the purposes of the PRA.
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    \2\ The number of Board-supervised respondents was obtained from 
numbers published in the Board of Governors of the Federal Reserve 
System 96th Annual Report 2009: 845 State member banks, 204 branches 
& agencies of foreign banks, three commercial lending companies, and 
55 Edge Act or agreement corporations.
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    As discussed above, the Board proposes to amend model notices C-1 
through C-5 to incorporate the additional content requirements 
prescribed by section 1100F of the Dodd-Frank Act. In addition, the 
Board proposes to amend Form C-3 to clarify the differences between a 
proprietary score and a credit score that is obtained from a consumer 
reporting agency.
    The Board estimates that the proposed rule would impose a one-time 
increase in the total annual burden under Regulation B. The 1,107 
respondents would take, on average, 16 hours (two business days) to 
update their systems to comply with the disclosure requirements 
addressed in 12 CFR part 202. This one-time revision would increase the 
burden by 17,712 hours. The Board estimates that, on a continuing 
basis, the revision to the rule would have a negligible effect on the 
annual burden. The total annual burden for the Regulation B information 
collection is estimated to increase from 157,538 to 175,250 hours.
    Comments are invited on: (1) Whether the proposed collection of 
information is necessary for the proper performance of the Board's 
functions; including whether the information has practical utility; (2) 
the accuracy of the Board's estimate of the burden of the proposed 
information collection, including the cost of compliance; (3) ways to 
enhance the quality, utility, and clarity of the information to be 
collected; and (4) ways to minimize the burden of information 
collection on respondents, including through the use of automated 
collection techniques or other forms of information technology. 
Comments on the collection of information should be sent to Cynthia 
Ayouch, Acting Federal Reserve Clearance Officer, Division of Research 
and Statistics, Mail Stop 95-A, Board of Governors of the Federal 
Reserve System, Washington, DC 20551, with copies of such comments sent 
to the Office of Management and Budget, Paperwork Reduction Project 
(7100-0202), Washington, DC 20503.

B. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.) 
requires an agency either to provide an initial regulatory flexibility 
analysis with a proposed rule or certify that the proposed rule will 
not have a significant economic impact on a substantial number of small 
entities. The proposed regulations cover certain banks, other 
depository institutions, and non-bank entities that take adverse action 
against consumers. The Small Business Administration (SBA) establishes 
size standards that define which entities are small businesses for 
purposes of the RFA.\3\ The size standard to be considered a small 
business is: $175 million or less in assets for banks and other 
depository institutions; and $7 million or less in annual revenues for 
the majority of non-bank entities that are likely to be subject to the 
proposed regulations. The Board requests public comment in the 
following areas.
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    \3\ U.S. Small Business Administration, Table of Small Business 
Size Standards Matched to North American Industry Classification 
System Codes, available at http://www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdf.

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[[Page 13899]]

1. Reasons for the Proposed Rule
    Section 1100F of the Dodd-Frank Act amends section 615(a) of the 
FCRA to require persons to disclose a credit score and information 
relating to that credit score in adverse action notices when the person 
uses a credit score in taking adverse action. Specifically, a person 
must disclose, in addition to the information currently required by 
section 615(a) of the FCRA: (1) A numerical credit score used in making 
the credit decision; (2) the range of possible scores under the model 
used; (3) the key factors that adversely affected the credit score of 
the consumer in the model used; (4) the date on which the credit score 
was created; and (5) the name of the person or entity that provided the 
credit score. The effective date of these amendments is July 21, 2011.
    Certain model notices in Regulation B include the content required 
by both the ECOA and the FCRA adverse action provisions, so that 
creditors can use the model notices to comply with the adverse action 
requirements of both statutes. The Board is issuing proposed amendments 
to the combined ECOA-FCRA adverse action model notices in Regulation B 
pursuant to its existing authority under section 703(a) of the ECOA to 
facilitate compliance with the new requirements under section 1100F of 
the Dodd-Frank Act.
2. Statement of Objectives and Legal Basis
    The SUPPLEMENTARY INFORMATION above contains this information. The 
legal basis for the proposed regulations is section 703(a) of the ECOA. 
The proposed regulations are consistent with section 1100F of the Dodd-
Frank Act.
3. Description of Small Entities to Which the Regulation Applies
    The proposed regulations apply to any person that (1) is required 
to provide an adverse action notice to a consumer; and (2) uses a 
credit score in making the credit decision requiring an adverse action 
notice. The total number of small entities likely to be affected by the 
proposal is unknown because the Board does not have data on the number 
of small entities that use credit scores in taking adverse action in 
connection with consumer credit. The adverse action provisions of 
section 1100F of the Dodd-Frank Act have broad applicability to persons 
who use credit scores in taking adverse action in connection with the 
provision of consumer credit.
    Based on estimates compiled by the Board, the Federal Deposit 
Insurance Corporation, and the Office of Thrift Supervision, there are 
approximately 9,585 depository institutions that could be considered 
small entities and that are potentially subject to the proposed 
rule.\4\ The available data are insufficient to estimate the number of 
non-bank entities that would be subject to the proposed rule and that 
are small as defined by the SBA. Such entities would include non-bank 
mortgage lenders, auto finance companies, automobile dealers, other 
non-bank finance companies, insurance companies, employers, telephone 
companies, and utility companies.
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    \4\ The estimate includes 1,504 institutions regulated by the 
Board, 673 national banks, and 4,167 Federally-chartered credit 
unions, as determined by the Board. The estimate also includes 2,872 
institutions regulated by the FDIC and 369 thrifts regulated by the 
OTS. See 75 FR 36016, 36020 (Jun. 24, 2010).
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    It also is unknown how many of these small entities that meet the 
SBA's size standards and are potentially subject to the proposed 
regulations use credit scores in taking adverse action in connection 
with the provision of consumer credit. The proposed regulations do not 
impose any requirements on small entities that do not use credit scores 
in taking adverse action in connection with consumer credit.
    The Board invites comment regarding the number and type of small 
entities that would be affected by the proposed rule.
4. Projected Reporting, Recordkeeping and Other Compliance Requirements
    The compliance requirements of the proposed regulations are 
described in detail in the SUPPLEMENTARY INFORMATION above.
    The proposed regulations generally require a person that is 
required to provide an adverse action notice to a consumer and uses a 
credit score in making the credit decision to provide a credit score 
and information relating to that credit score in the notice, in 
addition to the information currently required by section 615(a) of the 
FCRA. A person is currently required to determine if it takes an 
adverse action, based in whole or in part on consumer reports, in 
connection with the provision of consumer credit. If the person does 
take adverse action based on consumer reports, the person is required 
to establish procedures for identifying those consumers to whom it must 
provide adverse action notices.
    A person that is required to provide adverse action notices to 
certain consumers would need to analyze the regulations. The person 
would need to determine whether it uses credit scores in taking adverse 
action against the consumers to whom it must provide adverse action 
notices. Persons that use credit scores in taking adverse action would 
need to provide a credit score and information relating to that credit 
score to those consumers to whom it must provide an adverse action 
notice, in addition to the information currently required by section 
615(a) of the FCRA. Persons would need to design, generate, and provide 
notices, including a credit score and information relating to that 
credit score, to the consumers to whom it must provide an adverse 
action notice.
    The Board seeks information and comment on any costs, compliance 
requirements, or changes in operating procedures arising from the 
application of the proposed rule to small institutions.
5. Identification of Duplicative, Overlapping, or Conflicting Federal 
Regulations
    The Board has not identified any Federal statutes or regulations 
that would duplicate, overlap, or conflict with the proposed 
regulations. As discussed in part III above, the proposed amendments to 
the adverse action rules are consistent with section 1100F of the Dodd-
Frank Act. The Board is proposing the rules pursuant to their existing 
authority under section 703(a) of the ECOA. The proposed amendments to 
the adverse action model notices have been designed to work in 
conjunction with the requirements of section 1100F of the Dodd-Frank 
Act to help facilitate uniform compliance when this section becomes 
effective. The Board seeks comment regarding any statutes or 
regulations, including State or local statutes or regulations, that 
would duplicate, overlap, or conflict with the proposed regulations.
6. Discussion of Significant Alternatives
    The Board welcomes comments on any significant alternatives 
consistent with section 703(a) of the ECOA and the provisions of 
section 1100F of the Dodd-Frank Act that would minimize the impact of 
the proposed regulations on small entities.

Text of Proposed Revisions

    Certain conventions have been used to highlight the proposed 
revisions. New language is shown inside [rtrif]bold-type arrows[ltrif] 
while language that would be deleted is set off with .

[[Page 13900]]

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 and recordkeeping 
requirements, Sex Discrimination.

    For the reasons set forth in the preamble, the Board proposes to 
amend 12 CFR part 202 and the Official Staff Commentary, as follows:

PART 202--EQUAL CREDIT OPPORTUNITY ACT (REGULATION B)

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

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

    2. Appendix C to Part 202 is amended by revising paragraph 2 and 
Forms C-1 through C-5 to read as follows:

Appendix C to Part 202--Sample Notification Forms

* * * * *
    2. Form C-1 contains the Fair Credit Reporting Act disclosure as 
required by sections 615(a) and (b) of that act. Forms C-2 through 
C-5 contain only the section 615(a) disclosure (that a creditor 
obtained information from a consumer reporting agency that  [rtrif]was considered[ltrif] in the credit decision 
[rtrif]and, as applicable, a credit score used in taking adverse 
action along with related information[ltrif]). A creditor must 
provide the section 615(a) disclosure when adverse action is taken 
against a consumer based on information from a consumer reporting 
agency. A creditor must provide the section 615(b) disclosure when 
adverse action is taken based on information from an outside source 
other than a consumer reporting agency. In addition, a creditor must 
provide the section 615(b) disclosure if the creditor obtained 
information from an affiliate other than information in a consumer 
report or other than information concerning the affiliate's own 
transactions or experiences with the consumer. Creditors may comply 
with the disclosure requirements for adverse action based on 
information in a consumer report obtained from an affiliate by 
providing either the section 615(a) or section 615(b) disclosure.
* * * * *

Form C-1--Sample Notice of Action Taken and Statement of Reasons 
Statement of Credit Denial, Termination or Change

Date:------------------------------------------------------------------
Applicant's Name:------------------------------------------------------
Applicant's Address:---------------------------------------------------

Description of Account, Transaction, or Requested Credit:
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Description of Action Taken:
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Part I--Principal Reason(s) for Credit Denial, Termination, or Other 
Action Taken Concerning Credit

    This section must be completed in all instances.

----Credit application incomplete
----Insufficient number of credit references provided
----Unacceptable type of credit references provided
----Unable to verify credit references
----Temporary or irregular employment
----Unable to verify employment
----Length of employment
----Income insufficient for amount of credit requested
----Excessive obligations in relation to income
----Unable to verify income
----Length of residence
----Temporary residence
----Unable to verify residence
----No credit file
----Limited credit experience
----Poor credit performance with us
----Delinquent past or present credit obligations with others
----Collection action or judgment
----Garnishment or attachment
----Foreclosure or repossession
----Bankruptcy
----Number of recent inquiries on credit bureau report
---- Value or type of collateral not sufficient
----Other, specify:
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Part II--Disclosure of Use of Information Obtained From an Outside 
Source

    This section should be completed if the credit decision was 
based in whole or in part on information that has been obtained from 
an outside source.
    ----Our credit decision was based in whole or in part on 
information obtained in a report from the consumer reporting agency 
listed below. You have a right under the Fair Credit Reporting Act 
to know the information contained in your credit file at the 
consumer reporting agency. The reporting agency played no part in 
our decision and is unable to supply specific reasons why we have 
denied credit to you. You also have a right to a free copy of your 
report from the reporting agency, if you request it no later than 60 
days after you receive this notice. In addition, if you find that 
any information contained in the report you receive is inaccurate or 
incomplete, you have the right to dispute the matter with the 
reporting agency.

Name:------------------------------------------------------------------
Address:---------------------------------------------------------------
[Toll-free] Telephone number:------------------------------------------

    [rtrif][We also obtained your credit score from this consumer 
reporting agency and used it in making our credit decision. Your 
credit score is a number that reflects the information in your 
credit report. Your credit score can change, depending on how the 
information in your credit report changes.

Your credit score:-----------------------------------------------------
Date:------------------------------------------------------------------
Scores range from a low of---------------------------------------------
 to a high of----------------------------------------------------------

Key factors that adversely affected your credit score:
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
[Number of recent inquiries on credit report]][ltrif]

    ----Our credit decision was based in whole or in part on 
information obtained from an affiliate or from an outside source 
other than a consumer reporting agency. Under the Fair Credit 
Reporting Act, you have the right to make a written request, no 
later than 60 days after you receive this notice, for disclosure of 
the nature of this information.
    If you have any questions regarding this notice, you should 
contact:

Creditor's name:-------------------------------------------------------
Creditor's address:----------------------------------------------------
Creditor's telephone number:-------------------------------------------

    Notice: The Federal Equal Credit Opportunity Act prohibits 
creditors from discriminating against credit applicants on the basis 
of race, color, religion, national origin, sex, marital status, age 
(provided the applicant has the capacity to enter into a binding 
contract); because all or part of the applicant's income derives 
from any public assistance program; or because the applicant has in 
good faith exercised any right under the Consumer Credit Protection 
Act. The Federal agency that administers compliance with this law 
concerning this creditor is (name and address as specified by the 
appropriate agency listed in appendix A).

Form C-2--Sample Notice of Action Taken and Statement of Reasons

Date

    Dear Applicant: Thank you for your recent application. Your 
request for [a loan/a credit card/an increase in your credit limit] 
was carefully considered, and we regret that we are unable to 
approve your application at this time, for the following reason(s):

Your Income:
----is below our minimum requirement.
----is insufficient to sustain payments on the amount of credit 
requested.
----could not be verified.

Your Employment:
----is not of sufficient length to qualify.
----could not be verified.

Your Credit History:
---- of making payments on time was not satisfactory.
----could not be verified.
Your Application:
----lacks a sufficient number of credit references.
----lacks acceptable types of credit references.
----reveals that current obligations are excessive in relation to 
income.
Other:-----------------------------------------------------------------

    The consumer reporting agency contacted that provided 
information that influenced our decision in whole or in part was 
[name, address and [toll-free] telephone number of the reporting 
agency]. The reporting agency played no part in our decision and is 
unable to supply specific reasons why we have denied credit to you. 
You have a right under

[[Page 13901]]

the Fair Credit Reporting Act to know the information contained in 
your credit file at the consumer reporting agency. You also have a 
right to a free copy of your report from the reporting agency, if 
you request it no later than 60 days after you receive this notice. 
In addition, if you find that any information contained in the 
report you receive is inaccurate or incomplete, you have the right 
to dispute the matter with the reporting agency. Any questions 
regarding such information should be directed to [consumer reporting 
agency]. If you have any questions regarding this letter, you should 
contact us at [creditor's name, address and telephone number].
    [rtrif][We also obtained your credit score from this consumer 
reporting agency and used it in making our credit decision. Your 
credit score is a number that reflects the information in your 
credit report. Your credit score can change, depending on how the 
information in your credit report changes.

Your credit score:-----------------------------------------------------
Date:------------------------------------------------------------------
Scores range from a low of---------------------------------------------
to a high of-----------------------------------------------------------

Key factors that adversely affected your credit score:
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
[Number of recent inquiries on credit report]][ltrif]

    Notice: The Federal Equal Credit Opportunity Act prohibits 
creditors from discriminating against credit applicants on the basis 
of race, color, religion, national origin, sex, marital status, age 
(provided the applicant has the capacity to enter into a binding 
contract); because all or part of the applicant's income derives 
from any public assistance program; or because the applicant has in 
good faith exercised any right under the Consumer Credit Protection 
Act. The Federal agency that administers compliance with this law 
concerning this creditor is (name and address as specified by the 
appropriate agency listed in appendix A).

Form C-3--Sample Notice of Action Taken and Statement of Reasons 
[rtrif][(Credit Scoring)][ltrif]

Date

    Dear Applicant: Thank you for your recent application for ------
----------. We regret that we are unable to approve your request.

[rtrif][Reasons for Denial of Credit][ltrif]

    Your application was processed by a [rtrif][[ltrif]credit 
scoring[rtrif]][ltrif] system that assigns a numerical value to the 
various items of information we consider in evaluating an 
application. These numerical values are based upon the results of 
analyses of repayment histories of large numbers of customers.
    The information you provided in your application did not score a 
sufficient number of points for approval of the application. The 
reasons you did not score well compared with other applicants were:
     Insufficient bank references
     Type of occupation
     Insufficient credit experience
     Number of recent inquiries on credit bureau report

[rtrif][Your Right to Get Your Credit Report][ltrif]

    In evaluating your application the consumer reporting agency 
listed below provided us with information that in whole or in part 
influenced our decision. The consumer reporting agency played no 
part in our decision and is unable to supply specific reasons why we 
have denied credit to you. You have a right under the Fair Credit 
Reporting Act to know the information contained in your credit file 
at the consumer reporting agency. It can be obtained by contacting: 
[name, address, and [toll-free] telephone number of the consumer 
reporting agency]. You also have a right to a free copy of your 
report from the reporting agency, if you request it no later than 60 
days after you receive this notice. In addition, if you find that 
any information contained in the report you receive is inaccurate or 
incomplete, you have the right to dispute the matter with the 
reporting agency.

[rtrif][Information about Your Credit Score

    We also obtained your credit score from this consumer reporting 
agency and used it in making our credit decision. Your credit score 
is a number that reflects the information in your credit report. 
Your credit score can change, depending on how the information in 
your credit report changes.

Your credit score:-----------------------------------------------------
Date:------------------------------------------------------------------
Scores range from a low of---------------------------------------------
to a high of-----------------------------------------------------------

Key factors that adversely affected your credit score:
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
[Number of recent inquiries on credit report]][ltrif]

    If you have any questions regarding this letter, you should 
contact us at

Creditor's Name:-------------------------------------------------------
Address:---------------------------------------------------------------
-----------------------------------------------------------------------
Telephone:-------------------------------------------------------------

    Sincerely,

    Notice: The Federal Equal Credit Opportunity Act prohibits 
creditors from discriminating against credit applicants on the basis 
of race, color, religion, national origin, sex, marital status, age 
(with certain limited exceptions); because all or part of the 
applicant's income derives from any public assistance program; or 
because the applicant has in good faith exercised any right under 
the Consumer Credit Protection Act. The Federal agency that 
administers compliance with this law concerning this creditor is 
(name and address as specified by the appropriate agency listed in 
appendix A).

Form C-4--Sample Notice of Action Taken, Statement of Reasons and 
Counteroffer

Date

    Dear Applicant: Thank you for your application for ------------
----. We are unable to offer you credit on the terms that you 
requested for the following reason(s):
-----------------------------------------------------------------------
    We can, however, offer you credit on the following terms: ------
----------
-----------------------------------------------------------------------
    If this offer is acceptable to you, please notify us within 
[amount of time] at the following address: ----------------.
    Our credit decision on your application was based in whole or in 
part on information obtained in a report from [name, address and 
[toll-free] telephone number of the consumer reporting agency]. You 
have a right under the Fair Credit Reporting Act to know the 
information contained in your credit file at the consumer reporting 
agency. The reporting agency played no part in our decision and is 
unable to supply specific reasons why we have denied credit to you. 
You also have a right to a free copy of your report from the 
reporting agency, if you request it no later than 60 days after you 
receive this notice. In addition, if you find that any information 
contained in the report you receive is inaccurate or incomplete, you 
have the right to dispute the matter with the reporting agency.
    [rtrif][We also obtained your credit score from this consumer 
reporting agency and used it in making our credit decision. Your 
credit score is a number that reflects the information in your 
credit report. Your credit score can change, depending on how the 
information in your credit report changes.

Your credit score:-----------------------------------------------------
Date:------------------------------------------------------------------
Scores range from a low of---------------------------------------------
 to a high of----------------------------------------------------------

Key factors that adversely affected your credit score:
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
[Number of recent inquiries on credit report]][ltrif]

    You should know that the Federal Equal Credit Opportunity Act 
prohibits creditors, such as ourselves, from discriminating against 
credit applicants on the basis of their race, color, religion, 
national origin, sex, marital status, age (provided the applicant 
has the capacity to enter into a binding contract), because they 
receive income from a public assistance program, or because they may 
have exercised their rights under the Consumer Credit Protection 
Act. If you believe there has been discrimination in handling your 
application you should contact the [name and address of the 
appropriate Federal enforcement agency listed in appendix A].

    Sincerely,

Form C-5--Sample Disclosure of Right to Request Specific Reasons for 
Credit Denial

Date

    Dear Applicant: Thank you for applying to us for --------------
--.
    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 you would like a 
statement of specific reasons why your application was denied, 
please contact [our credit service manager] shown below within 60 
days of the date of this

[[Page 13902]]

letter. We will provide you with the statement of reasons within 30 
days after receiving your request.

Creditor's Name--------------------------------------------------------
Address----------------------------------------------------------------
Telephone Number-------------------------------------------------------

    If we obtained information from a consumer reporting agency as 
part of our consideration of your application, its name, address, 
and [toll-free] telephone number is shown below. The reporting 
agency played no part in our decision and is unable to supply 
specific reasons why we have denied credit to you. [You have a right 
under the Fair Credit Reporting Act to know the information 
contained in your credit file at the consumer reporting agency.] You 
have a right to a free copy of your report from the reporting 
agency, if you request it no later than 60 days after you receive 
this notice. In addition, if you find that any information contained 
in the report you received is inaccurate or incomplete, you have the 
right to dispute the matter with the reporting agency. You can find 
out about the information contained in your file (if one was used) 
by contacting:
Consumer reporting agency's name
Address
[Toll-free] Telephone number

    [rtrif][We also obtained your credit score from this consumer 
reporting agency and used it in making our credit decision. Your 
credit score is a number that reflects the information in your 
credit report. Your credit score can change, depending on how the 
information in your credit report changes.

Your credit score:-----------------------------------------------------
Date:------------------------------------------------------------------
Scores range from a low of ---------------- to a high of ----------
------

Key factors that adversely affected your credit score:

-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
[Number of recent inquiries on credit report]][ltrif]

    Sincerely,

    Notice: The Federal Equal Credit Opportunity Act prohibits 
creditors from discriminating against credit applicants on the basis 
of race, color, religion, national origin, sex, marital status, age 
(provided the applicant has the capacity to enter into a binding 
contract); because all or part of the applicant's income derives 
from any public assistance program; or because the applicant has in 
good faith exercised any right under the Consumer Credit Protection 
Act. The Federal agency that administers compliance with this law 
concerning this creditor is (name and address as specified by the 
appropriate 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 202--Official Staff Interpretations

* * * * *

Section 202.9--Notifications

* * * * *

Paragraph 9(b)(2)

* * * * *
    9. Combined ECOA-FCRA disclosures. The ECOA requires disclosure 
of the principal reasons for denying or taking other adverse action 
on an application for an extension of credit. The Fair Credit 
Reporting Act (FCRA) requires a creditor to disclose when it has 
based its decision in whole or in part on information from a source 
other than the applicant or its own files. Disclosing that a credit 
report was obtained and used in the denial of the application, as 
the FCRA requires, does not satisfy the ECOA requirement to disclose 
specific reasons. For example, if the applicant's credit history 
reveals delinquent credit obligations and the application is denied 
for that reason, to satisfy Sec.  202.9(b)(2) the creditor must 
disclose that the application was denied because of the applicant's 
delinquent credit obligations. [rtrif]The FCRA also requires a 
creditor to disclose, as applicable, a credit score it used in 
taking adverse action along with related information, including the 
key factors that adversely affected the consumer's credit score. 
Disclosing the key factors that adversely affected the consumer's 
credit score does not satisfy the ECOA requirement to disclose 
specific reasons for denying or taking other adverse action on an 
application or extension of credit.[ltrif]  
Sample forms C-1 through C-5 of Appendix C of the regulation provide 
for the two disclosures. 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. 2011-5417 Filed 3-14-11; 8:45 am]
BILLING CODE 6210-01-P