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#2270325 - 05/11/22 05:21 PM Adverse Action on Deposit Account with OD feature
dhutson Offline
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Joined: Sep 2015
Posts: 24
If we rely on a credit report to approve/deny a deposit account that includes overdraft protection, is the overdraft protection considered a credit feature that would trigger the Reg B requirements on the adverse action notice?

Trying to determine if the combined Reg B/FCRA adverse action notice is required or if it only triggers the FCRA AA notice requirements.

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#2270332 - 05/11/22 06:40 PM Re: Adverse Action on Deposit Account with OD feature dhutson
cornichon Offline
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Joined: Mar 2019
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I'm very curious as to people's answers here as well. My related tweak would be, say you approve someone for the deposit account but deny them overdraft based on a credit report. Would you need the Reg B AAN?

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#2270399 - 05/12/22 07:22 PM Re: Adverse Action on Deposit Account with OD feature dhutson
dhutson Offline
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Joined: Sep 2015
Posts: 24
In our case qualifying for overdraft will not be based on the credit report at all. The only thing the credit report will be used for will be decisioning whether to open the deposit account. It would be an Equifax Insights score rather than a FICO score.

We were told that if the deposit account does not have a credit feature, it would not trigger the Reg B requirements. If it does have a credit feature, denying an application for a deposit account decisioned with a credit report triggers both FCRA and Reg B Adverse Action Notice requirements. So now we are trying to figure out if the OD feature on our deposit account is a credit feature that triggers Reg B Adverse Action notice requirements.

I have found in the 2005 Joint Guidance on Overdraft Protection Programs a reference to Reg B 202.3(c) on "Incidental Credit". This suggests that if OD program qualifies as incidental credit, it would be exempt from the notification requirements under Reg B 202.9.

So not sure if I am connecting the right dots, but if our OD program falls under the "Incidental Credit", can we assume that that feature is not a credit feature that triggers Reg B notification requirements? I'm guessing tentatively yes, but hoping some of you "experts" will correct me if I'm connecting the wrong dots.

Not sure if this should have been posted in the Fair Lending thread instead of FCRA.

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