By Leslie Callaway, CRCM, CAFP
Q/ Is the CFPB’s A Summary of Your Rights Under the Fair Credit Reporting Act required solely for denied employment applications, or must the bank provide it under other circumstances, such as a denial of credit?
A/ That specific form is required only for denied employment. What information must be provided in the event of a non-employment adverse decision, such as a credit denial, is addressed in §615(a). These adverse action notices must provide: information about the consumer reporting agency providing the report; and statements that the consumer reporting agency did not make the decision, that the consumer has a right to free copy of the report, and that the consumer may dispute inaccurate information; and information about any credit score used. The list does not include the Summary of Your Rights Under the Fair Credit Reporting Act. (Answer provided May 2024.)
Q/ My bank is seeking input on what adverse action reason the bank could disclose for declining a loan request from a marijuana related business, or MRB. It is my bank’s policy to not bank MRBs, but occasionally, it receives an indirect loan application from an MRB and will deny the request. My bank would like to disclose the reason accurately, but none of the standard reasons on the model adverse action forms seem to apply.
A/ Technically, an adverse action notice may not be required. The bank could rely on §1002.2(c)(2) (iv) of Regulation B (Equal Credit Opportunity Act), which states, “A refusal to extend credit because applicable law prohibits the creditor from extending the credit requested” is not adverse action. Because marijuana possession remains a crime under federal law, providing services to MRBs could be construed as facilitating the operation of an illegal enterprise. In addition, the federal illegality of the business creates a risk that the bank will not be able to access any property securing the loan in the event of a default because law enforcement may seize the property. In effect, the bank may be making an unsecured loan.
However, assuming the bank prefers to err on the side of providing an adverse action notice, Regulation B (Equal Credit Opportunity Act) requires only that the reasons be specific (§1002.9(b)(2)). Your reason could be that the bank’s policy is not to do business with MRBs, which is true and specific. (Answer provided May 2024.)
Q/ Is it permissible for a bank to provide a written RESPA error notification to a borrower via email in response to a borrower’s written notice of error, and if so, must the written (emailed) notification comply with the E-Sign Act?
A/ Banks may send any disclosures and correspondence required by the Real Estate Settlement Procedures Act (Regulation X), Subpart C — Mortgage Servicing, electronically if they comply with the E-Sign Act, unless the specific section of Subpart C states otherwise. The error notification provisions are found under §1026.35 which do not have any separate electronic disclosure provisions.
Section 1024.32(a)(1) in relevant part states: “The disclosures required by this subpart may be provided in electronic form, subject to compliance with the consumer consent and other applicable provisions of the E-Sign Act, as set forth in §1024.3.” (Answer provided April 2024.)
Q Where would my bank have to place a disclosure seeking the customer’s consent for mobile and email marketing communications during the online account opening process/application?
A/ It depends on to whom the bank is marketing. This response will assume that the bank is asking to market its own customers, not to share customer information with affiliates for marketing purposes.
The Telephone Consumer Protection Act applies to both texts and mobile phone calls. TCPA prohibits telemarketing calls or texts to cell phones using an automatic telephone dialing system, better known as an autodialer — or prerecorded voice, unless the caller has the prior-express written consent of the called party. This consent may be obtained at the time the bank requests the consumer’s mobile phone number or at another time. There is no one right time or place. Consent must be in writing, clear and conspicuous, and obtained prior to placing any autodialed or pre-recorded voice calls. (Note, too, that marketing calls to landlines made with pre-recorded voice are subject to the same written authorization rules.)
For email marketing, the CAN-SPAM Act applies. That law requires that, for commercial messages, that is, any “electronic mail message the primary purpose of which is the commercial advertisement or promotion of a commercial product or service,” the email sender allow recipients to opt out of receiving marketing emails. The ability to be removed from a business’s email marketing list must be included in the email itself.
If the bank is not using an autodialer or pre-recorded voice, then the TCPA’s prior-express consent requirement does not apply to the call. However, the bank may need to look to state law to determine if any provision restricts the placement of calls or texts. (Answer provided April 2024.)
Answers are provided by ABA Regulatory Policy and Compliance team member Leslie T. Callaway, CRCM, CAFP, senior director, compliance outreach and development. Answers do not provide, nor are they substitutes for, professional legal services.
