Question & Answer
Question: Under ECOA, we only have to give the adverse action notice to the primary applicant. But sometimes the application is denied because of information in a secondary applicant's credit report. Does the same rule apply to FCRA? That is, can we send the notice only to the primary applicant, or must we also send a FCRA notice to the secondary applicant?
Answer: The FCRA turns on the consumer, not the application. It is designed to protect the consumer's privacy and ensure that information in consumer reports is accurate. This goal can't be accomplished by giving the notice only to the principle applicant. In fact, FCRA doesn't take multiple applicants into account. It requires the creditor to notify "the consumer" when information in that consumer's report is used to deny the application.
Staff at the Federal Trade Commission, the agency responsible for interpreting the FCRA, agrees that this is a gray area. So there is some room for defense if you haven't been providing FCRA notices to all affected consumers. However, they advise that the spirit of the law would require giving the FCRA notice to each applicant whose credit report contained information that was used to deny the application.
This view is consistent with other aspects of FCRA. For example, FCRA provides that when an application is denied because of information in the consumer's credit report, the consumer has a right to a free copy of the report. If the bank doesn't send the notice, the consumer doesn't get that free copy.
Copyright © 1998 Compliance Action. Originally appeared in Compliance Action, Vol. 3, No. 1, 1/98
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