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Hi, Dave Dickinson with Bankers Compliance Consulting. I want to talk about adverse action notices and talk about two regulatory requirements, the Reg B Equal Credit Opportunity Act and the Fair Credit Reporting Act. And then I want to make this a little more difficult, let's talk about multiple applicants. So, you've got two different people that are applying together. Who gets what? Well, when it comes to Reg B, Equal Credit Opportunity says that the primary applicant has to get all reasons for denial, not just theirs. So imagine, let's just take my son, I'm going to come in with him to help him out because he's young, he hasn't gotten credit before. So dear old dad comes along really maybe as a cosigner, maybe a comaker doesn't really matter. He's the primary, I'm not. And let's say that you pull our credit reports, he has limited credit experience, I've got bankruptcy or delinquency or some other flaw on my credit history.

You've got to tell the primary applicant all reasons. Now you can tell me all the reasons as well, but you don't have to. You have to tell the primary applicant. There is no privacy when it comes to join applications, for Reg B. So my son gets all reasons, I can get all reasons, probably your system, that's the way it's going to do it. Or you could just tell me mine, I don't have to get all reasons. Now here's the tricky part, any time you use a credit report adversely against a consumer, you have to tell all the applicants. It's a strange twist, you'd think you would just tell me that my credit history is bad, or you'd just tell my son that his credit history is bad, but there's a section in the Federal Trade Commission, 2011 interpretations as well as in the Federal Register, and I'm not going to get all geeky on you here, but basically that says that the Fair Credit Reporting Act says if anybody's credit report is bad, you’ve got to tell all applicants and that they're likely to have an understanding of who that is.

So you're going to tell the primary applicant their credit history is bad or somebody's credit history is bad, I should say, and you're also going to tell the co-applicant. Now what if you used a credit score? Can you tell the primary my score and can you tell me the primary score, my son, let's just say? The answer is you should try to keep those confidential as much as possible. It's not really privacy, but you do need to give my son his score and you need to give me my score.

Now prepare an adverse action notice, it's got his name, it's got all reasons because he's the primary, it's got the, "We used a credit report adversely against you," and then it's got the credit score disclosure. Great, took care of him. Send another notice with all reasons, or just mine doesn't matter, I'm the secondary, I get the Fair Credit Reporting Act box marked that says we use your credit report and my credit score. Now let's say we live at the same address. Can you put those in the same envelope and type them up to, my son's name is Jeremiah, Jeremiah and Dave Dickinson, can you do that? Well, the American Bankers Association wrote a letter to the regulators several years ago asking just that question. And the regulator said, "Yes, they need to be separately prepared, but doesn't mean they can't be mailed together." It talks about that there's some confidentiality to credit scores. But here was the argument, imagine that we agreed to e-sign and we give an email and the only email we give is my son's or mine, but one email for both of us.

If you e-signed us and you're going to email this as these denial notices and credit score disclosure, how would you send those separately? And the answer is you can't. So you're going to comply with e-sign by sending these two different things prepared separately, one for Jeremiah, one for Dave, but they're going to go to the same email. What's the difference between that and a letter that comes in the mail? Or maybe it's my wife and I, we jointly apply for a car loan and you’re denying us. She gets a credit score disclosure, I get a credit score disclosure. Can they go in the same envelope? And the answer is yes. Now that may not be your institution's procedures, but my question would be, why not? Why are you preparing two envelopes if you're doing it that way? Just want you to know that you can with the credit score disclosure, do it that way, I need you to understand that the primary gets all reasons for now and when it comes to the Fair Credit Reporting Act, if anybody's credit history is bad, everybody gets the FCRA notice that says they get a free copy and can dispute the accuracy. I hope this helps with your procedures on adverse action notices.