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When Should You Provide an Adverse Action Notice? (Infographic)

When Should You Provide an Adverse Action Notice? (Infographic)

If you’re an organization that processes credit applications, it is your duty to provide an Adverse Action Notice if a consumer is denied credit. And you’ve got to provide it within 30 days of receiving a credit application. There are two key laws here (both federal) that govern the requirements around adverse action notices  — the Equal Credit Opportunity Act (ECOA) and the Fair Credit Reporting Act (FCRA). They’re in place to make sure consumers applying for credit are given the reasons a creditor took adverse action on the application (or on an existing credit account).

Adverse action means:

  • Denying credit to an applicant
  • Refusing to grant credit in substantially the amount or on substantially the terms requested by the applicant, unless the applicant accepts your counteroffer;
  • Any action taken or determination that is adverse to the interests of the consumer (for example, unwinding a spot delivery)

So, when should you provide an Adverse Action Notification?

This handy flow chart can help you figure it out…

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About The Author

Toby Graham

Toby manages the marketing communications team here at KPA. She's on a quest to help people tell clear, fun stories that their audience can relate to. She's a HUGE sugar junkie...and usually starts wandering the halls looking for cookies around 3pm daily.

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