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Reg B, Adverse Action Notices, and Debit Cards

Question: 
I was told that Reg B required us to send out an adverse action notice anytime we revoked a debit card. I'mconfused over this since Reg B deals with granting credit and a debit card accesses the checking account. Can you provide me some guidance?
Answer: 

Answer by Jim Bedsole:
I don't think that Reg B requires an adverse action notice for the revocation of a debit card. However, if therevocation was due in whole or part to information in a consumer report (e.g., a credit bureau report), or due to information from an third party, then FCRA would require an adverse action notification. The format and content requirements for this notice are not exactly the same as the Reg B requirements.

Answer: 

Answer by Lucy Griffin:
The debit card is not credit unless it can access an overdraft line of credit. Thus, revoking a debit card with nooverdraft feature would not involve any cancellation or adverse action with respect to credit, hence no adverseaction notice.

If the card is connected to an overdraft line of credit, and that overdraft line is cancelled (even if the debit card isnot) then the customer should be notified under Regulation B. But if only the debit card and its use is cancelled, itshouldn't trigger an adverse action notice.

However, as Jim points out, there is always FCRA. That now applies to deposit transactions. So if the action wastriggered by a consumer report as defined in FCRA, then the FCRA adverse action notice should be provided.However, if you cancel the card because of the customer's poor management of the account, and no credit reportis used, then no notice is triggered. However, you probably want to tell the customer that his/her card won't workany more.

Answer: 

Answer by Andy Zavoina:
I agree that someone likely confused FCRA and Reg. B. Many of the same terms are associated with each.

FCRA, Section 615, [15 U.S.C. Section 1681m] applies when you take adverse action against someone because of informationbased in a consumer report. So if you refuse to grant a product or service because of a credit bureau report usedby your loan area or check verification service on the teller line, an FCRA disclosure is required.

First published on BankersOnline.com 7/2/01

First published on 07/02/2001

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