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#609 - 02/07/01 02:27 PM adverse action notices

Are we required to send adverse action notices if we deny a customer a debit card based on the fact that they have had a large number of nsf checks? Also, what if they have a card and we decide to "kill" it due to repeat overdrawing of the account?

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#610 - 02/07/01 02:56 PM Re: adverse action notices
Andy_Z Offline
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Joined: Oct 2000
Posts: 27,748
On the Net
Adverse action notices under Reg. B apply to credit and the refusal to grant credit. If these do not involve OD lines you should be OK.

FCRA may come into play depending on how you find out about the NSFs. If this is from a CRA such as TeleCheck or Chex Systems you will have a disclosure to make, but it isn't your typical adverse action notice.

Andy Zavoina
Opinions stated are not necessarily that of my employer.

[This message has been edited by Andy Z (edited 02-07-2001).]

My opinions are not necessarily my employers.
Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell

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#611 - 02/08/01 03:11 PM Re: adverse action notices
John Burnett Offline
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John Burnett
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Posts: 40,086
Cape Cod
. . . and, to answer the rest of your question, if the excess overdraft information is based on your own bank's experience with the customer, the FCRA doesn't come into play.

Ditto on "killing" a debit card due to experience. I think your steps here are (1) "hot list" or otherwise disable the card in order to stanch the flow of overdrafts; (2) notify the customer of your action, including the reason [this isn't a regulatory rule, but probably required from a customer-relations perspective]; and [maybe](3) figure out if there's a pattern that points to loose issuing practices.

John S. Burnett
Fighting for Compliance since 1976
Bankers' Threads User #8

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