![]() In this follow-up article, we discuss advanced AAN requirements, including counteroffers, incomplete applications, and withdrawn applications. 2 Outlook published an article in 2013 on these requirements titled “Adverse Action Notice Requirements Under the ECOA and the FCRA ,” which is our most viewed article. Unlike the ECOA, however, the FCRA applies only to consumers and more broadly applies to adverse action on certain noncredit transactions such as employment or insurance applications. The Fair Credit Reporting Act (FCRA) also imposes AAN requirements in certain circumstances. As the legislative history of the ECOA quoted at the beginning of this article indicates, these notices provide transparency to the credit underwriting process and help protect applicants against potential credit discrimination by requiring creditors to specify the reasons for taking adverse action. If adverse action is taken, as defined in the ECOA and Regulation B, the creditor must provide an adverse action notice (AAN) disclosing the reasons for taking adverse action, and, if a credit score was used, the key factors adversely affecting the score. The Equal Credit Opportunity Act (ECOA), as implemented by Regulation B, requires creditors to notify businesses and consumers applying for credit about the action taken on their applications within specified time periods. ― Legislative history of Equal Credit Opportunity Act Amendments of 1976 1 Instead of being told only that they do not meet a particular creditor’s standards, consumers particularly should benefit from knowing, for example, that the reason for the denial is their short residence in the area, or their recent change of employment, or their already over-extended financial situation. ![]() ejected credit applicants will now be able to learn where and how their credit status is deficient and this information should have a pervasive and valuable educational benefit. a strong and necessary adjunct to the antidiscrimination purpose of the legislation, for only if creditors know they must explain their decisions will they effectively be discouraged from discriminatory practices. The requirement that creditors give reasons for adverse action is …. Of course, both are winning situations for the credit card company.Consumer Compliance Outlook: Fourth Issue 2021 Advanced Topics in Adverse Action Notices Under the Equal Credit Opportunity Actīy Dolores Collazo, Senior Examiner, Federal Reserve Bank of Atlanta Either they’re shopaholics who are madly in love with their credits cards, or their shopaholics madly in love with their husband’s credit cards. Today, there are two kinds of ways today’s credit card ads handle women, as Lisa Wade at The Society Pages points out. According to a study by the Financial Industry Regulatory Authority, women pay a half a point higher interest rate than men. It was the first bank in the United States to be operated by women and for women, at a time when its founders said that women were given short shrift by other banks.īut despite the law, a report from 2012 found that women still pay more for credit cards. Mello, as Eric Pace reported in the New York Times obituary for Mello: The bank, a creation of the feminist movement, was established in April 1975. ![]() And, finally, in 1974-forty years ago this year-the Senate passed the Equal Credit Opportunity Act, which made it illegal to discriminate against someone based on their gender, race, religion and national origin.Ī year later, in 1975, the first women’s bank was opened by Judy H. ![]() Forty years ago, any woman applying for a credit card could be asked a barrage of questions: Was she married? Did she plan to have children? Many banks required single, divorced or widowed women to bring a man along with them to cosign for a credit card, and some discounted the wages of women by as much as 50 percent when calculating their credit card limits.Īs women and minorities pushed for equal civil rights in various arenas, credit cards became the focus of a series of hearings in which women documented the discrimination they faced.
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