Adverse Action notification sent in error

Is it a violation of Regulation B, if we sent an Adverse Action notification, declining a consumer credit, when they in fact elected to not utilize the offer that we approved them for because the APR was too high?

If they expected a certain rate and you did not approve them at that (or a lower) rate, that is adverse action and a notice was required.

Al

They were shopping rates, and received a better offer from someone else, after we had approved them. When they notified us that they were going with someone else because the APR was too high, we inadvertently sent a model form C-8 declining the customer. This notification was sent in error.

It should have been noted as approved, not accepted. This is not adverse action. I would likely send a letter of apology to them, especially if the denial listed derogratory information in error.

We realize that is should have been listed as approved, not accepted, and we are sending a letter of apology; however, is there a violation of the Regulation since we did send an AA notice to someone who didn't deserve it?

No - purely a clerical error.

I agree. It is a clerical error and not a violation. In fact, it is never a violation to tell a customer what their credit weaknesses are.

It is safer to send the notice in this situation than not if the customer ever mentioned a target APR. However, if no discussion of rate came up during the application, then your rate is not a counter-offer -- merely non-competitive.