13896 Federal Register / Vol. 76, No. 50 / Tuesday, March 15, 2011 / Proposed Rules 

1Section 1100H of the Dodd-Frank Act provides 

that the amendments in Subtitle H of Title X, which 

includes Section 1100F, become effective on the 

‘‘designated transfer date.’’ The Secretary of the 

Treasury set the designated transfer date as July 21, 

2011. 75 FR 57252 (Sept. 20, 2010). 

(d) Commercial consignments. 

Tomatoes with stems from the Republic 

of Korea may be imported in 

commercial consignments only. 

(e) Phytosanitary certificate. Each 

consignment of tomatoes must be 

accompanied by a phytosanitary 

certificate of inspection issued by the 

NPPO of the Republic of Korea bearing 

the following additional declaration: 

‘‘Tomatoes in this consignment were 

grown in pest-exclusionary structures in 

accordance with 7 CFR 319.56–51 and 

were inspected and found free from 

Bactrocera depressa, Heliocoverpa 

armigera, Heliocoverpa assulta, 

Mamestra brassicae, Ostrinia furnacalis, 

Scirtothrips dorsalis, and Thrips palmi.’’ 

Done in Washington, DC, this 9th day of 

March 2011. 

Kevin Shea, 

Acting Administrator, Animal and Plant 

Health Inspection Service. 

[FR Doc. 2011–5963 Filed 3–14–11; 8:45 am] 

BILLING CODE 3410–34–P 

FEDERAL RESERVE SYSTEM 

12 CFR Part 202 

[Regulation B; Docket No. R–1408] 

RIN No. 7100–AD67 

Equal Credit Opportunity 

AGENCY: Board of Governors of the 

Federal Reserve System (Board). 

ACTION: Notice of proposed rulemaking. 

SUMMARY: Section 701 of the Equal 

Credit Opportunity Act (ECOA) requires 

a creditor to notify a credit applicant 

when it has taken adverse action against 

the applicant. The ECOA adverse action 

requirements are implemented in the 

Board’s Regulation B. Section 615(a) of 

the Fair Credit Reporting Act (FCRA) 

also requires a person to provide a 

notice when the person takes an adverse 

action against a consumer based in 

whole or in part on information in a 

consumer report. Certain model notices 

in Regulation B include the content 

required by both the ECOA and the 

FCRA adverse action provisions, so that 

creditors can use the model notices to 

comply with the adverse action 

requirements of both statutes. The Board 

proposes to amend these model notices 

in Regulation B to include the 

disclosure of credit scores and 

information relating to credit scores if a 

credit score is used in taking adverse 

action. These proposed amendments 

reflect the new content requirements in 

section 615(a) of the FCRA that were 

added by section 1100F of the DoddFrank Wall Street Reform and Consumer 

Protection Act. 

DATES: Comments must be received on 

or before April 14, 2011. Comments on 

the Paperwork Reduction Act analysis 

set forth in Section III.A. of this Federal 

Register notice must be received on or 

before May 16, 2011. 

ADDRESSES: You may submit comments, 

identified by Docket No. R–1408, by any 

of the following methods: 

• Agency Web Site: http:// 

www.federalreserve.gov. Follow the 

instructions for submitting comments 

on the http://www.federalreserve.gov/

generalinfo/foia/ProposedRegs.cfm. 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• E-mail: 

regs.comments@federalreserve.gov. 

Include docket number in the subject 

line of the message. 

• FAX: 202–452–3819 or 202–452– 

3102. 

• Mail: Jennifer J. Johnson, Secretary, 

Board of Governors of the Federal 

Reserve System, 20th Street and 

Constitution Avenue, NW., Washington, 

DC 20551. 

All public comments are available 

from the Board’s Web site at http://

www.federalreserve.gov/generalinfo/

foia/ProposedRegs.cfm as submitted, 

unless modified for technical reasons. 

Accordingly, your comments will not be 

edited to remove any identifying or 

contact information. Public comments 

may also be viewed electronically or in 

paper in Room MP–500 of the Board’s 

Martin Building (20th and C Streets, 

NW.) between 9 a.m. and 5 p.m. on 

weekdays. 

FOR FURTHER INFORMATION CONTACT: 

Board: Mandie K. Aubrey, Senior 

Attorney, or Catherine Henderson, 

Attorney, Division of Consumer and 

Community Affairs, (202) 452–3667 or 

(202) 452–2412, Board of Governors of 

the Federal Reserve System, 20th and C 

Streets, NW., Washington, DC 20551. 

For users of a Telecommunications 

Device for the Deaf (TDD) only, contact 

(202) 263–4869. 

SUPPLEMENTARY INFORMATION: 

I. Background 

The Equal Credit Opportunity Act 

(ECOA), 15 U.S.C. 1691 et seq., makes 

it unlawful for creditors to discriminate 

in any aspect of a credit transaction on 

the basis of sex, race, color, religion, 

national origin, marital status, or age 

(provided the applicant has the capacity 

to contract), because all or part of an 

applicant’s income derives from public 

assistance, or because an applicant has 

in good faith exercised any right under 

the Consumer Credit Protection Act. 

The Board’s Regulation B (12 CFR part 

202) implements the ECOA. 

Section 701(d) of the ECOA generally 

requires a creditor to notify a credit 

applicant against whom it has taken an 

adverse action. Under section 701(d)(6) 

of the ECOA, an adverse action 

generally means a denial or revocation 

of credit, a change in the terms of an 

existing credit arrangement, or a refusal 

to grant credit in substantially the 

amount or on substantially the terms 

requested. 

Section 615(a) of the FCRA also 

requires a person to provide an adverse 

action notice when the person takes an 

adverse action based in whole or in part 

on information in a consumer report. 

The definition of adverse action in 

section 603(k) of the FCRA incorporates, 

for purposes of credit transactions, the 

definition of adverse action under 

ECOA. The adverse action provisions in 

both the ECOA and the FCRA require 

certain disclosures to be given to 

consumers. 

The ECOA adverse action provisions 

are implemented in Regulation B. There 

are no implementing regulations for the 

adverse action requirements of section 

615(a) of the FCRA. However, as 

explained in comment 202.9(b)(2)–9 of 

Regulation B, certain model notices in 

Regulation B include the content 

required by both the ECOA and the 

FCRA, so that persons can use the 

model notices to comply with the 

adverse action requirements of both 

statutes. 

On July 21, 2010, the Dodd-Frank 

Wall Street Reform and Consumer 

Protection Act (Dodd-Frank Act) was 

signed into law. Public Law 111–203, 

124 Stat. 1376. Section 1100F of the 

Dodd-Frank Act amends section 615(a) 

of the FCRA to require creditors to 

disclose on FCRA adverse action notices 

a credit score used in taking any adverse 

action and information relating to that 

score. The effective date of these 

amendments is July 21, 2011.1

The Board is proposing to amend 

those model adverse action notices in 

Regulation B which incorporate the 

content requirements of section 615(a) 

of the FCRA to reflect the new content 

requirements added by section 1100F of 

the Dodd-Frank Act. These revisions to 

the model notices will help facilitate 

uniform compliance when section 

1100F of the Dodd-Frank Act becomes 

effective. Thus, pursuant to its authority 

mstockstill on DSKH9S0YB1PROD with PROPOSALS

Federal Register / Vol. 76, No. 50 / Tuesday, March 15, 2011 / Proposed Rules 13897 

in section 703(a) of the ECOA, the Board 

is proposing to amend certain adverse 

action model notices in Regulation B 

consistent with the requirements of 

section 1100F of the Dodd-Frank Act. 

II. Section-by-Section Analysis 

Appendix C to Part 202—Sample 

Notification Forms 

Under section 701(d) of the ECOA, a 

creditor must provide to applicants 

against whom adverse action is taken 

either: (1) A statement of reasons for 

taking the adverse action as a matter of 

course; or (2) a notification of adverse 

action which discloses the applicant’s 

right to a statement of reasons within 

thirty days after receipt by the creditor 

of a request made by the applicant 

within sixty days after the written 

notification. Section 615(a) of the FCRA 

requires a person to provide in an 

adverse action notice information 

regarding the consumer reporting 

agency that furnished the consumer 

report used in taking the adverse action. 

It also requires a person to disclose that 

a consumer has a right to a free credit 

report and right to dispute the accuracy 

or completeness of any information in a 

consumer report. 

Section 1100F of the Dodd-Frank Act 

amends section 615(a) of the FCRA to 

require that creditors disclose additional 

information on FCRA adverse action 

notices. Specifically, a person must 

disclose on a FCRA adverse action 

notice a credit score used in taking any 

adverse action and information relating 

to that score, in addition to the 

information currently required by 

section 615(a) of the FCRA. The statute 

generally requires that the FCRA 

adverse action notice include: (1) A 

numerical credit score used in making 

the credit decision; (2) the range of 

possible scores under the model used; 

(3) the key factors that adversely 

affected the credit score of the consumer 

in the model used; (4) the date on which 

the credit score was created; and (5) the 

name of the person or entity that 

provided the credit score. 

As explained in paragraph 2 of 

Appendix C to part 202, model notices 

C–1 through C–5 may be used to comply 

with the adverse action provisions of 

both the ECOA and the FCRA. The 

Board proposes to amend model notices 

C–1 through C–5 to incorporate the 

additional content requirements 

prescribed by section 1100F of the 

Dodd-Frank Act. 

Under the proposal, Forms C–1 

through C–5 would be revised to 

include, as applicable, a statement that 

the creditor obtained the consumer’s 

credit score from a consumer reporting 

agency named in the notice and used 

the score in making the credit decision. 

The notice would also state that a credit 

score is a number that reflects the 

information in the consumer’s credit 

report and that the consumer’s credit 

score can change, depending on how the 

information in the consumer’s credit 

report changes. The model notices 

would also provide space for the 

creditor to include the content required 

under section 1100F of the Dodd-Frank 

Act that is specific to the consumer. 

This content includes: the consumer’s 

credit score, the date the credit score 

was created, the range of possible credit 

scores under the model used, and up to 

four key factors that adversely affected 

the consumer’s credit score (or up to 

five factors if the number of enquiries 

made with respect to that consumer 

report is one of the factors). 

In addition to the content added to 

each of Forms C–1 through C–5, Form 

C–3 would be amended for clarity. Form 

C–3 is a model notice that can be used 

by creditors in circumstances where the 

creditor uses a proprietary credit scoring 

system to make a credit decision and 

where the creditor uses information 

from a consumer reporting agency in 

this scoring evaluation. As discussed 

above, section 1100F of the Dodd-Frank 

Act requires information regarding a 

credit score that is obtained from a 

consumer reporting agency to be 

included on an adverse action notice. 

The Board believes discussing two 

different types of credit scoring systems 

on Form C–3 could be confusing for 

consumers. Therefore, the Board 

proposes to amend Form C–3 to clarify 

the differences between a proprietary 

score and a credit score that is obtained 

from a consumer reporting agency. The 

text would clarify that the consumer’s 

application was processed by a system 

that assigns a numerical value to the 

various items of information the creditor 

considers when evaluating the 

consumer’s application. This numerical 

value is based upon analyses of 

repayment histories of the creditor’s 

customers. The proposed form would 

also add topic headings to help 

distinguish the different types of scores 

that were used in making the credit 

decision. It would also remove the 

reference to credit scoring in the title of 

the form. 

In some cases, a person who is 

required to provide an adverse action 

notice under the FCRA may use a 

consumer report, but not a credit score, 

in taking the adverse action. Under 

section 1100F of the Dodd-Frank Act, a 

person is not required to disclose a 

credit score and related information if a 

credit score is not used in taking the 

adverse action. Therefore, the 

amendments to Forms C–1 through 

C–5 are only applicable if a credit score 

is used in taking an adverse action. A 

person may amend, at its option, Form 

C–3 to add the additional headings and 

remove the reference to a credit scoring 

system, even if the person does not add 

the heading and information about the 

consumer’s credit score. 

The Board notes that section 1100F of 

the Dodd-Frank Act requires a creditor 

to provide, if applicable, a consumer’s 

credit score and related information, 

regardless of whether it provides a 

statement of specific reasons for taking 

the adverse action or a disclosure of the 

applicant’s right to a statement of 

specific reasons for an adverse action. 

Therefore, a creditor would not comply 

with the FCRA adverse action 

provisions by providing the required 

FCRA disclosures only if a consumer 

responds to a request for a statement of 

specific reasons for an adverse action. 

As a result, proposed Form C–5 reflects 

the requirement to provide the 

disclosures required by section 615(a) of 

the FCRA, including the consumer’s 

credit score and the key factors that 

adversely affected the credit score, at 

the time a creditor provides a disclosure 

of the applicant’s right to a statement of 

specific reasons for an adverse action. 

The Board requests comment on 

whether the proposed revisions to the 

content of the adverse action model 

notices are appropriate. The Board also 

solicits comment on whether additional 

or different changes to the model 

notices should be adopted. 

The Board also proposes to amend 

paragraph 2 of Appendix C, which 

discusses the disclosure requirements of 

section 615 of the FCRA that are 

contained in Forms C–1 through C–5. 

Paragraph 2 explains that Form C–1 

contains the disclosures required by 

sections 615(a) and (b) of the FCRA, and 

Forms C–2 through C–5 contain only 

disclosures required by section 615(a) of 

the FCRA. Paragraph 2 also describes 

the circumstances under which a 

creditor must provide the section 615(a) 

disclosures or the section 615(b) 

disclosures. 

The paragraph states that the 

combined ECOA–FCRA disclosures in 

Form C–1 through Form C–5 must state 

that a creditor obtained information 

from a consumer reporting agency. 

Consistent with section 1100F of the 

Dodd-Frank Act, the paragraph would 

be revised to state that the combined 

disclosure must also include, as 

applicable, a credit score used in taking 

adverse action along with related 

information. The paragraph would also 

be revised to clarify that information 

mstockstill on DSKH9S0YB1PROD with PROPOSALS

13898 Federal Register / Vol. 76, No. 50 / Tuesday, March 15, 2011 / Proposed Rules 

2The number of Board-supervised respondents 

was obtained from numbers published in the Board 

of Governors of the Federal Reserve System 96th 

Annual Report 2009: 845 State member banks, 204 

branches & agencies of foreign banks, three 

commercial lending companies, and 55 Edge Act or 

agreement corporations. 

3U.S. Small Business Administration, Table of 

Small Business Size Standards Matched to North 

American Industry Classification System Codes, 

available at http://www.sba.gov/idc/groups/public/

documents/sba_homepage/serv_sstd_tablepdf.pdf. 

from a consumer reporting agency was 

considered in the credit decision. 

Supplement I to Part 202—Official Staff 

Interpretations 

The Board proposes to amend 

comment 9(b)(2)–9 to reflect the 

proposed changes to the adverse action 

model notices. Comment 9(b)(2)–9 

addresses the combined ECOA–FCRA 

adverse action disclosures. The 

proposed amendment would clarify that 

the FCRA requires a creditor to disclose, 

as applicable, a credit score it used in 

taking adverse action along with related 

information, including the key factors 

that adversely affected the consumer’s 

credit score. It would also eliminate a 

statement that is redundant. 

The proposed amendment to 

comment 9(b)(2)–9 would also clarify 

that disclosing the key factors that 

adversely affected the consumer’s credit 

score does not satisfy the ECOA 

requirement to disclose specific reasons 

for denying or taking other adverse 

action on an application or extension of 

credit. The Board recognizes that a key 

factor(s) that adversely affected the 

consumer’s credit score may be the 

same as a specific reason(s) for denying 

credit or taking other adverse action. 

However, some specific reasons for 

taking adverse action may be unrelated 

to a consumer’s credit score, such as 

reasons related to the consumer’s 

income, employment, or residency. 

Therefore, the Board believes the 

disclosure of both the key factors that 

adversely affected the consumer’s credit 

score and the specific reasons for 

denying credit or taking other adverse 

action is necessary to fulfill the separate 

requirements of the ECOA and the 

FCRA. 

III. Regulatory Analysis 

A. Paperwork Reduction Act 

In accordance with the Paperwork 

Reduction Act of 1995 (PRA) (44 U.S.C. 

3506; 5 CFR part 1320 Appendix A.1), 

the Board reviewed the proposed 

rulemaking under the authority 

delegated to the Board by the Office of 

Management and Budget (OMB). The 

collection of information that is 

required by this proposed rulemaking is 

found in 12 CFR 202. In addition, as 

permitted by the PRA, the Board also 

proposes to extend for three years the 

current recordkeeping and disclosure 

requirements in connection with 

Regulation B. The Board may not 

conduct or sponsor, and an organization 

is not required to respond to, this 

information collection unless it displays 

a currently valid OMB control number. 

The OMB control number is 7100–0201. 

Section 703(a)(1) of the Equal Credit 

Opportunity Act (15 U.S.C. 1691b(a)(1)) 

authorizes the Board to issue regulations 

to carry out the provisions of the Act. 

The purpose of the Act is to ensure that 

credit is made available to all 

creditworthy customers without 

discrimination on the basis of race, 

color, religion, national origin, sex, 

marital status, age (provided the 

applicant has the capacity to contract), 

receipt of public assistance income, or 

the fact that the applicant has in good 

faith exercised any right under the 

Consumer Credit Protection Act (15 

U.S.C. 1600 et seq.). This information 

collection is mandatory. 

Regulation B applies to all types of 

creditors, not just State member banks. 

However, under the Paperwork 

Reduction Act, the Board accounts for 

the burden of the paperwork associated 

with the regulation only for entities that 

are supervised by the Board. Appendix 

A of Regulation B defines these 

creditors as State member banks, 

branches and agencies of foreign banks 

(other than Federal branches, Federal 

agencies, and insured state branches of 

foreign banks), commercial lending 

companies owned or controlled by 

foreign banks, and organizations 

operating under section 25 or 25A of the 

Federal Reserve Act. Other Federal 

agencies account for the paperwork 

burden for the institutions they 

supervise. Creditors are required to 

retain records for 12 to 25 months as 

evidence of compliance. 

The current annual burden to comply 

with the provisions of Regulation B is 

estimated to be 157,538 hours for the 

1,107 institutions 2 supervised by the 

Board that are deemed to be 

respondents for the purposes of the 

PRA. 

As discussed above, the Board 

proposes to amend model notices C–1 

through C–5 to incorporate the 

additional content requirements 

prescribed by section 1100F of the 

Dodd-Frank Act. In addition, the Board 

proposes to amend Form C–3 to clarify 

the differences between a proprietary 

score and a credit score that is obtained 

from a consumer reporting agency. 

The Board estimates that the proposed 

rule would impose a one-time increase 

in the total annual burden under 

Regulation B. The 1,107 respondents 

would take, on average, 16 hours (two 

business days) to update their systems 

to comply with the disclosure 

requirements addressed in 12 CFR part 

202. This one-time revision would 

increase the burden by 17,712 hours. 

The Board estimates that, on a 

continuing basis, the revision to the rule 

would have a negligible effect on the 

annual burden. The total annual burden 

for the Regulation B information 

collection is estimated to increase from 

157,538 to 175,250 hours. 

Comments are invited on: (1) Whether 

the proposed collection of information 

is necessary for the proper performance 

of the Board’s functions; including 

whether the information has practical 

utility; (2) the accuracy of the Board’s 

estimate of the burden of the proposed 

information collection, including the 

cost of compliance; (3) ways to enhance 

the quality, utility, and clarity of the 

information to be collected; and (4) 

ways to minimize the burden of 

information collection on respondents, 

including through the use of automated 

collection techniques or other forms of 

information technology. Comments on 

the collection of information should be 

sent to Cynthia Ayouch, Acting Federal 

Reserve Clearance Officer, Division of 

Research and Statistics, Mail Stop 95–A, 

Board of Governors of the Federal 

Reserve System, Washington, DC 20551, 

with copies of such comments sent to 

the Office of Management and Budget, 

Paperwork Reduction Project (7100– 

0202), Washington, DC 20503. 

B. Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA) 

(5 U.S.C. 601 et seq.) requires an agency 

either to provide an initial regulatory 

flexibility analysis with a proposed rule 

or certify that the proposed rule will not 

have a significant economic impact on 

a substantial number of small entities. 

The proposed regulations cover certain 

banks, other depository institutions, and 

non-bank entities that take adverse 

action against consumers. The Small 

Business Administration (SBA) 

establishes size standards that define 

which entities are small businesses for 

purposes of the RFA.3 The size standard 

to be considered a small business is: 

$175 million or less in assets for banks 

and other depository institutions; and 

$7 million or less in annual revenues for 

the majority of non-bank entities that 

are likely to be subject to the proposed 

regulations. The Board requests public 

comment in the following areas. 

mstockstill on DSKH9S0YB1PROD with PROPOSALS

Federal Register / Vol. 76, No. 50 / Tuesday, March 15, 2011 / Proposed Rules 13899 

4The estimate includes 1,504 institutions 

regulated by the Board, 673 national banks, and 

4,167 Federally-chartered credit unions, as 

determined by the Board. The estimate also 

includes 2,872 institutions regulated by the FDIC 

and 369 thrifts regulated by the OTS. See 75 FR 

36016, 36020 (Jun. 24, 2010). 

1. Reasons for the Proposed Rule 

Section 1100F of the Dodd-Frank Act 

amends section 615(a) of the FCRA to 

require persons to disclose a credit score 

and information relating to that credit 

score in adverse action notices when the 

person uses a credit score in taking 

adverse action. Specifically, a person 

must disclose, in addition to the 

information currently required by 

section 615(a) of the FCRA: (1) A 

numerical credit score used in making 

the credit decision; (2) the range of 

possible scores under the model used; 

(3) the key factors that adversely 

affected the credit score of the consumer 

in the model used; (4) the date on which 

the credit score was created; and (5) the 

name of the person or entity that 

provided the credit score. The effective 

date of these amendments is July 21, 

2011. 

Certain model notices in Regulation B 

include the content required by both the 

ECOA and the FCRA adverse action 

provisions, so that creditors can use the 

model notices to comply with the 

adverse action requirements of both 

statutes. The Board is issuing proposed 

amendments to the combined ECOA– 

FCRA adverse action model notices in 

Regulation B pursuant to its existing 

authority under section 703(a) of the 

ECOA to facilitate compliance with the 

new requirements under section 1100F 

of the Dodd-Frank Act. 

2. Statement of Objectives and Legal 

Basis 

The SUPPLEMENTARY INFORMATION

above contains this information. The 

legal basis for the proposed regulations 

is section 703(a) of the ECOA. The 

proposed regulations are consistent with 

section 1100F of the Dodd-Frank Act. 

3. Description of Small Entities to 

Which the Regulation Applies 

The proposed regulations apply to 

any person that (1) is required to 

provide an adverse action notice to a 

consumer; and (2) uses a credit score in 

making the credit decision requiring an 

adverse action notice. The total number 

of small entities likely to be affected by 

the proposal is unknown because the 

Board does not have data on the number 

of small entities that use credit scores in 

taking adverse action in connection 

with consumer credit. The adverse 

action provisions of section 1100F of the 

Dodd-Frank Act have broad 

applicability to persons who use credit 

scores in taking adverse action in 

connection with the provision of 

consumer credit. 

Based on estimates compiled by the 

Board, the Federal Deposit Insurance 

Corporation, and the Office of Thrift 

Supervision, there are approximately 

9,585 depository institutions that could 

be considered small entities and that are 

potentially subject to the proposed 

rule.4 The available data are insufficient 

to estimate the number of non-bank 

entities that would be subject to the 

proposed rule and that are small as 

defined by the SBA. Such entities 

would include non-bank mortgage 

lenders, auto finance companies, 

automobile dealers, other non-bank 

finance companies, insurance 

companies, employers, telephone 

companies, and utility companies. 

It also is unknown how many of these 

small entities that meet the SBA’s size 

standards and are potentially subject to 

the proposed regulations use credit 

scores in taking adverse action in 

connection with the provision of 

consumer credit. The proposed 

regulations do not impose any 

requirements on small entities that do 

not use credit scores in taking adverse 

action in connection with consumer 

credit. 

The Board invites comment regarding 

the number and type of small entities 

that would be affected by the proposed 

rule. 

4. Projected Reporting, Recordkeeping 

and Other Compliance Requirements 

The compliance requirements of the 

proposed regulations are described in 

detail in the SUPPLEMENTARY

INFORMATION above. 

The proposed regulations generally 

require a person that is required to 

provide an adverse action notice to a 

consumer and uses a credit score in 

making the credit decision to provide a 

credit score and information relating to 

that credit score in the notice, in 

addition to the information currently 

required by section 615(a) of the FCRA. 

A person is currently required to 

determine if it takes an adverse action, 

based in whole or in part on consumer 

reports, in connection with the 

provision of consumer credit. If the 

person does take adverse action based 

on consumer reports, the person is 

required to establish procedures for 

identifying those consumers to whom it 

must provide adverse action notices. 

A person that is required to provide 

adverse action notices to certain 

consumers would need to analyze the 

regulations. The person would need to 

determine whether it uses credit scores 

in taking adverse action against the 

consumers to whom it must provide 

adverse action notices. Persons that use 

credit scores in taking adverse action 

would need to provide a credit score 

and information relating to that credit 

score to those consumers to whom it 

must provide an adverse action notice, 

in addition to the information currently 

required by section 615(a) of the FCRA. 

Persons would need to design, generate, 

and provide notices, including a credit 

score and information relating to that 

credit score, to the consumers to whom 

it must provide an adverse action 

notice. 

The Board seeks information and 

comment on any costs, compliance 

requirements, or changes in operating 

procedures arising from the application 

of the proposed rule to small 

institutions. 

5. Identification of Duplicative, 

Overlapping, or Conflicting Federal 

Regulations 

The Board has not identified any 

Federal statutes or regulations that 

would duplicate, overlap, or conflict 

with the proposed regulations. As 

discussed in part III above, the proposed 

amendments to the adverse action rules 

are consistent with section 1100F of the 

Dodd-Frank Act. The Board is proposing 

the rules pursuant to their existing 

authority under section 703(a) of the 

ECOA. The proposed amendments to 

the adverse action model notices have 

been designed to work in conjunction 

with the requirements of section 1100F 

of the Dodd-Frank Act to help facilitate 

uniform compliance when this section 

becomes effective. The Board seeks 

comment regarding any statutes or 

regulations, including State or local 

statutes or regulations, that would 

duplicate, overlap, or conflict with the 

proposed regulations. 

6. Discussion of Significant Alternatives 

The Board welcomes comments on 

any significant alternatives consistent 

with section 703(a) of the ECOA and the 

provisions of section 1100F of the DoddFrank Act that would minimize the 

impact of the proposed regulations on 

small entities. 

Text of Proposed Revisions 

Certain conventions have been used 

to highlight the proposed revisions. 

New language is shown inside flboldtype arrowsfi while language that 

would be deleted is set off with <boldtype angles>. 

mstockstill on DSKH9S0YB1PROD with PROPOSALS

13900 Federal Register / Vol. 76, No. 50 / Tuesday, March 15, 2011 / Proposed Rules 

List of Subjects in 12 CFR Part 202 

Aged, Banks, Banking, Civil Rights, 

Consumer protection, Credit, 

Discrimination, Federal Reserve System, 

Marital Status Discrimination, Penalties, 

Religious Discrimination, Reporting and 

recordkeeping requirements, Sex 

Discrimination. 

For the reasons set forth in the 

preamble, the Board proposes to amend 

12 CFR part 202 and the Official Staff 

Commentary, as follows: 

PART 202—EQUAL CREDIT 

OPPORTUNITY ACT (REGULATION B) 

1. The authority citation for part 202 

continues to read as follows: 

Authority: 15 U.S.C. 1693b. 

2. Appendix C to Part 202 is amended 

by revising paragraph 2 and Forms 

C–1 through C–5 to read as follows: 

Appendix C to Part 202—Sample 

Notification Forms 

* * * * * 

2. Form C–1 contains the Fair Credit 

Reporting Act disclosure as required by 

sections 615(a) and (b) of that act. Forms C– 

2 through C–5 contain only the section 615(a) 

disclosure (that a creditor obtained 

information from a consumer reporting 

agency that <played a part> flwas 

consideredfi in the credit decision fland, as 

applicable, a credit score used in taking 

adverse action along with related 

informationfi). A creditor must provide the 

section 615(a) disclosure when adverse 

action is taken against a consumer based on 

information from a consumer reporting 

agency. A creditor must provide the section 

615(b) disclosure when adverse action is 

taken based on information from an outside 

source other than a consumer reporting 

agency. In addition, a creditor must provide 

the section 615(b) disclosure if the creditor 

obtained information from an affiliate other 

than information in a consumer report or 

other than information concerning the 

affiliate’s own transactions or experiences 

with the consumer. Creditors may comply 

with the disclosure requirements for adverse 

action based on information in a consumer 

report obtained from an affiliate by providing 

either the section 615(a) or section 615(b) 

disclosure. 

* * * * * 

Form C–1—Sample Notice of Action Taken 

and Statement of Reasons Statement of Credit 

Denial, Termination or Change 

Date: llllllllllllllllll

Applicant’s Name: llllllllllll

Applicant’s Address: lllllllllll

Description of Account, Transaction, or 

Requested Credit: 

lllllllllllllllllllll

lllllllllllllllllllll

Description of Action Taken: 

lllllllllllllllllllll

lllllllllllllllllllll

Part I—Principal Reason(s) for Credit Denial, 

Termination, or Other Action Taken 

Concerning Credit 

This section must be completed in all 

instances. 

llCredit application incomplete 

llInsufficient number of credit references 

provided 

llUnacceptable type of credit references 

provided 

llUnable to verify credit references 

llTemporary or irregular employment 

llUnable to verify employment 

llLength of employment 

llIncome insufficient for amount of credit 

requested 

llExcessive obligations in relation to 

income 

llUnable to verify income 

llLength of residence 

llTemporary residence 

llUnable to verify residence 

llNo credit file 

llLimited credit experience 

llPoor credit performance with us 

llDelinquent past or present credit 

obligations with others 

llCollection action or judgment 

llGarnishment or attachment 

llForeclosure or repossession 

llBankruptcy 

llNumber of recent inquiries on credit 

bureau report 

ll Value or type of collateral not sufficient 

llOther, specify: 

llllllllll llllllllll

Part II—Disclosure of Use of Information 

Obtained From an Outside Source 

This section should be completed if the 

credit decision was based in whole or in part 

on information that has been obtained from 

an outside source. 

llOur credit decision was based in 

whole or in part on information obtained in 

a report from the consumer reporting agency 

listed below. You have a right under the Fair 

Credit Reporting Act to know the information 

contained in your credit file at the consumer 

reporting agency. The reporting agency 

played no part in our decision and is unable 

to supply specific reasons why we have 

denied credit to you. You also have a right 

to a free copy of your report from the 

reporting agency, if you request it no later 

than 60 days after you receive this notice. In 

addition, if you find that any information 

contained in the report you receive is 

inaccurate or incomplete, you have the right 

to dispute the matter with the reporting 

agency. 

Name: lllllllllllllllll

Address: llllllllllllllll

[Toll-free] Telephone number: llllll

fl[We also obtained your credit score from 

this consumer reporting agency and used it 

in making our credit decision. Your credit 

score is a number that reflects the 

information in your credit report. Your credit 

score can change, depending on how the 

information in your credit report changes. 

Your credit score: llllllllllll

Date: llllllllllllllllll

Scores range from a low of llllllll

to a high of lllllllllllllll

Key factors that adversely affected your 

credit score: 

lllllllllllllllllllll

lllllllllllllllllllll

lllllllllllllllllllll

lllllllllllllllllllll

[Number of recent inquiries on credit 

report]]fi 

llOur credit decision was based in 

whole or in part on information obtained 

from an affiliate or from an outside source 

other than a consumer reporting agency. 

Under the Fair Credit Reporting Act, you 

have the right to make a written request, no 

later than 60 days after you receive this 

notice, for disclosure of the nature of this 

information. 

If you have any questions regarding this 

notice, you should contact: 

Creditor’s name: lllllllllllll

Creditor’s address: llllllllllll

Creditor’s telephone number: lllllll

Notice: The Federal Equal Credit 

Opportunity Act prohibits creditors from 

discriminating against credit applicants on 

the basis of race, color, religion, national 

origin, sex, marital status, age (provided the 

applicant has the capacity to enter into a 

binding contract); because all or part of the 

applicant’s income derives from any public 

assistance program; or because the applicant 

has in good faith exercised any right under 

the Consumer Credit Protection Act. The 

Federal agency that administers compliance 

with this law concerning this creditor is 

(name and address as specified by the 

appropriate agency listed in appendix A). 

Form C–2—Sample Notice of Action Taken 

and Statement of Reasons 

Date 

Dear Applicant: Thank you for your recent 

application. Your request for [a loan/a credit 

card/an increase in your credit limit] was 

carefully considered, and we regret that we 

are unable to approve your application at this 

time, for the following reason(s): 

Your Income: 

llis below our minimum requirement. 

llis insufficient to sustain payments on the 

amount of credit requested. 

llcould not be verified. 

Your Employment: 

llis not of sufficient length to qualify. 

llcould not be verified. 

Your Credit History: 

ll of making payments on time was not 

satisfactory. 

llcould not be verified. 

Your Application: 

lllacks a sufficient number of credit 

references. 

lllacks acceptable types of credit 

references. 

llreveals that current obligations are 

excessive in relation to income. 

Other: lllllllllllllllll

The consumer reporting agency contacted 

that provided information that influenced 

our decision in whole or in part was [name, 

address and [toll-free] telephone number of 

the reporting agency]. The reporting agency 

played no part in our decision and is unable 

to supply specific reasons why we have 

denied credit to you. You have a right under 

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Federal Register / Vol. 76, No. 50 / Tuesday, March 15, 2011 / Proposed Rules 13901 

the Fair Credit Reporting Act to know the 

information contained in your credit file at 

the consumer reporting agency. You also 

have a right to a free copy of your report from 

the reporting agency, if you request it no later 

than 60 days after you receive this notice. In 

addition, if you find that any information 

contained in the report you receive is 

inaccurate or incomplete, you have the right 

to dispute the matter with the reporting 

agency. Any questions regarding such 

information should be directed to [consumer 

reporting agency]. If you have any questions 

regarding this letter, you should contact us at 

[creditor’s name, address and telephone 

number]. 

fl[We also obtained your credit score from 

this consumer reporting agency and used it 

in making our credit decision. Your credit 

score is a number that reflects the 

information in your credit report. Your credit 

score can change, depending on how the 

information in your credit report changes. 

Your credit score: llllllllllll

Date: llllllllllllllllll

Scores range from a low of llllllll

to a high of lllllllllllllll

Key factors that adversely affected your 

credit score: 

lllllllllllllllllllll

lllllllllllllllllllll

lllllllllllllllllllll

lllllllllllllllllllll

[Number of recent inquiries on credit 

report]]fi 

Notice: The Federal Equal Credit 

Opportunity Act prohibits creditors from 

discriminating against credit applicants on 

the basis of race, color, religion, national 

origin, sex, marital status, age (provided the 

applicant has the capacity to enter into a 

binding contract); because all or part of the 

applicant’s income derives from any public 

assistance program; or because the applicant 

has in good faith exercised any right under 

the Consumer Credit Protection Act. The 

Federal agency that administers compliance 

with this law concerning this creditor is 

(name and address as specified by the 

appropriate agency listed in appendix A). 

Form C–3—Sample Notice of Action Taken 

and Statement of Reasons fl[(Credit 

Scoring)]fi 

Date 

Dear Applicant: Thank you for your recent 

application for llllllll. We regret 

that we are unable to approve your request. 

fl[Reasons for Denial of Credit]fi 

Your application was processed by a 

fl[ficredit scoringfl]fi system that assigns 

a numerical value to the various items of 

information we consider in evaluating an 

application. These numerical values are 

based upon the results of analyses of 

repayment histories of large numbers of 

customers. 

The information you provided in your 

application did not score a sufficient number 

of points for approval of the application. The 

reasons you did not score well compared 

with other applicants were: 

• Insufficient bank references 

• Type of occupation 

• Insufficient credit experience 

• Number of recent inquiries on credit 

bureau report 

fl[Your Right to Get Your Credit Report]fi 

In evaluating your application the 

consumer reporting agency listed below 

provided us with information that in whole 

or in part influenced our decision. The 

consumer reporting agency played no part in 

our decision and is unable to supply specific 

reasons why we have denied credit to you. 

You have a right under the Fair Credit 

Reporting Act to know the information 

contained in your credit file at the consumer 

reporting agency. It can be obtained by 

contacting: [name, address, and [toll-free] 

telephone number of the consumer reporting 

agency]. You also have a right to a free copy 

of your report from the reporting agency, if 

you request it no later than 60 days after you 

receive this notice. In addition, if you find 

that any information contained in the report 

you receive is inaccurate or incomplete, you 

have the right to dispute the matter with the 

reporting agency. 

fl[Information about Your Credit Score 

We also obtained your credit score from 

this consumer reporting agency and used it 

in making our credit decision. Your credit 

score is a number that reflects the 

information in your credit report. Your credit 

score can change, depending on how the 

information in your credit report changes. 

Your credit score: llllllllllll

Date: llllllllllllllllll

Scores range from a low of llllllll

to a high of lllllllllllllll

Key factors that adversely affected your 

credit score: 

lllllllllllllllllllll

lllllllllllllllllllll

lllllllllllllllllllll

lllllllllllllllllllll

[Number of recent inquiries on credit 

report]]fi 

If you have any questions regarding this 

letter, you should contact us at 

Creditor’s Name: lllllllllllll

Address: llllllllllllllll

lllllllllllllllllllll

Telephone: lllllllllllllll

Sincerely, 

Notice: The Federal Equal Credit 

Opportunity Act prohibits creditors from 

discriminating against credit applicants on 

the basis of race, color, religion, national 

origin, sex, marital status, age (with certain 

limited exceptions); because all or part of the 

applicant’s income derives from any public 

assistance program; or because the applicant 

has in good faith exercised any right under 

the Consumer Credit Protection Act. The 

Federal agency that administers compliance 

with this law concerning this creditor is 

(name and address as specified by the 

appropriate agency listed in appendix A). 

Form C–4—Sample Notice of Action Taken, 

Statement of Reasons and Counteroffer 

Date 

Dear Applicant: Thank you for your 

application for llllllll. We are 

unable to offer you credit on the terms that 

you requested for the following reason(s): 

lllllllllllllllllllll

We can, however, offer you credit on the 

following terms: llllllll 

lllllllllllllllllllll

If this offer is acceptable to you, please 

notify us within [amount of time] at the 

following address: llllllll. 

Our credit decision on your application 

was based in whole or in part on information 

obtained in a report from [name, address and 

[toll-free] telephone number of the consumer 

reporting agency]. You have a right under the 

Fair Credit Reporting Act to know the 

information contained in your credit file at 

the consumer reporting agency. The reporting 

agency played no part in our decision and is 

unable to supply specific reasons why we 

have denied credit to you. You also have a 

right to a free copy of your report from the 

reporting agency, if you request it no later 

than 60 days after you receive this notice. In 

addition, if you find that any information 

contained in the report you receive is 

inaccurate or incomplete, you have the right 

to dispute the matter with the reporting 

agency. 

fl[We also obtained your credit score from 

this consumer reporting agency and used it 

in making our credit decision. Your credit 

score is a number that reflects the 

information in your credit report. Your credit 

score can change, depending on how the 

information in your credit report changes. 

Your credit score: llllllllllll

Date: llllllllllllllllll

Scores range from a low of llllllll

to a high of lllllllllllllll

Key factors that adversely affected your 

credit score: 

lllllllllllllllllllll

lllllllllllllllllllll

lllllllllllllllllllll

lllllllllllllllllllll

[Number of recent inquiries on credit 

report]]fi 

You should know that the Federal Equal 

Credit Opportunity Act prohibits creditors, 

such as ourselves, from discriminating 

against credit applicants on the basis of their 

race, color, religion, national origin, sex, 

marital status, age (provided the applicant 

has the capacity to enter into a binding 

contract), because they receive income from 

a public assistance program, or because they 

may have exercised their rights under the 

Consumer Credit Protection Act. If you 

believe there has been discrimination in 

handling your application you should 

contact the [name and address of the 

appropriate Federal enforcement agency 

listed in appendix A]. 

Sincerely, 

Form C–5—Sample Disclosure of Right to 

Request Specific Reasons for Credit Denial 

Date 

Dear Applicant: Thank you for applying to 

us for llllllll. 

After carefully reviewing your application, 

we are sorry to advise you that we cannot 

[open an account for you/grant a loan to you/ 

increase your credit limit] at this time. If you 

would like a statement of specific reasons 

why your application was denied, please 

contact [our credit service manager] shown 

below within 60 days of the date of this 

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13902 Federal Register / Vol. 76, No. 50 / Tuesday, March 15, 2011 / Proposed Rules 

letter. We will provide you with the 

statement of reasons within 30 days after 

receiving your request. 

Creditor’s Name lllllllllllll

Address llllllllllllllll

Telephone Number lllllllllll

If we obtained information from a 

consumer reporting agency as part of our 

consideration of your application, its name, 

address, and [toll-free] telephone number is 

shown below. The reporting agency played 

no part in our decision and is unable to 

supply specific reasons why we have denied 

credit to you. [You have a right under the 

Fair Credit Reporting Act to know the 

information contained in your credit file at 

the consumer reporting agency.] You have a 

right to a free copy of your report from the 

reporting agency, if you request it no later 

than 60 days after you receive this notice. In 

addition, if you find that any information 

contained in the report you received is 

inaccurate or incomplete, you have the right 

to dispute the matter with the reporting 

agency. You can find out about the 

information contained in your file (if one was 

used) by contacting: 

Consumer reporting agency’s name 

Address 

[Toll-free] Telephone number 

fl[We also obtained your credit score from 

this consumer reporting agency and used it 

in making our credit decision. Your credit 

score is a number that reflects the 

information in your credit report. Your credit 

score can change, depending on how the 

information in your credit report changes. 

Your credit score: llllllllllll

Date: llllllllllllllllll

Scores range from a low of ________ to a high 

of ________ 

Key factors that adversely affected your 

credit score: 

lllllllllllllllllllll

lllllllllllllllllllll

lllllllllllllllllllll

lllllllllllllllllllll

[Number of recent inquiries on credit 

report]]fi 

Sincerely, 

Notice: The Federal Equal Credit 

Opportunity Act prohibits creditors from 

discriminating against credit applicants on 

the basis of race, color, religion, national 

origin, sex, marital status, age (provided the 

applicant has the capacity to enter into a 

binding contract); because all or part of the 

applicant’s income derives from any public 

assistance program; or because the applicant 

has in good faith exercised any right under 

the Consumer Credit Protection Act. The 

Federal agency that administers compliance 

with this law concerning this creditor is 

(name and address as specified by the 

appropriate agency listed in appendix A). 

* * * * * 

3. Supplement I to part 202 is 

amended by revising paragraph 9(b)(2)– 

9 to read as follows: 

Supplement I to Part 202—Official Staff 

Interpretations 

* * * * * 

Section 202.9—Notifications 

* * * * * 

Paragraph 9(b)(2) 

* * * * * 

9. Combined ECOA–FCRA disclosures. The 

ECOA requires disclosure of the principal 

reasons for denying or taking other adverse 

action on an application for an extension of 

credit. The Fair Credit Reporting Act (FCRA) 

requires a creditor to disclose when it has 

based its decision in whole or in part on 

information from a source other than the 

applicant or its own files. Disclosing that a 

credit report was obtained and used in the 

denial of the application, as the FCRA 

requires, does not satisfy the ECOA 

requirement to disclose specific reasons. For 

example, if the applicant’s credit history 

reveals delinquent credit obligations and the 

application is denied for that reason, to 

satisfy § 202.9(b)(2) the creditor must 

disclose that the application was denied 

because of the applicant’s delinquent credit 

obligations. flThe FCRA also requires a 

creditor to disclose, as applicable, a credit 

score it used in taking adverse action along 

with related information, including the key 

factors that adversely affected the consumer’s 

credit score. Disclosing the key factors that 

adversely affected the consumer’s credit 

score does not satisfy the ECOA requirement 

to disclose specific reasons for denying or 

taking other adverse action on an application 

or extension of credit.fi <To satisfy the 

FCRA requirement, the creditor must also 

disclose that a credit report was obtained and 

used in the denial of the application.> 

Sample forms C–1 through C–5 of Appendix 

C of the regulation provide for the two 

disclosures. See also comment 9(a)(2)–1. 

* * * * * 

By order of the Board of Governors of the 

Federal Reserve System, March 1, 2011. 

Jennifer J. Johnson, 

Secretary of the Board. 

[FR Doc. 2011–5417 Filed 3–14–11; 8:45 am] 

BILLING CODE 6210–01–P 

FEDERAL RESERVE SYSTEM 

12 CFR Part 222 

[Regulation V; Docket No. R–1407] 

RIN 7100–AD66 

FEDERAL TRADE COMMISSION 

16 CFR Parts 640 and 698 

RIN R411009 

Fair Credit Reporting Risk-Based 

Pricing Regulations 

AGENCIES: Board of Governors of the 

Federal Reserve System (Board) and 

Federal Trade Commission 

(Commission). 

ACTION: Notice of proposed rulemaking. 

SUMMARY: On January 15, 2010, the 

Board and the Commission published 

final rules to implement the risk-based 

pricing provisions in section 311 of the 

Fair and Accurate Credit Transactions 

Act of 2003 (FACT Act), which amends 

the Fair Credit Reporting Act (FCRA). 

The final rules generally require a 

creditor to provide a risk-based pricing 

notice to a consumer when the creditor 

uses a consumer report to grant or 

extend credit to the consumer on 

material terms that are materially less 

favorable than the most favorable terms 

available to a substantial proportion of 

consumers from or through that 

creditor. The Board and the Commission 

propose to amend their respective riskbased pricing rules to require disclosure 

of credit scores and information relating 

to credit scores in risk-based pricing 

notices if a credit score of the consumer 

is used in setting the material terms of 

credit. These proposed amendments 

reflect the new requirements in section 

615(h) of the FCRA that were added by 

section 1100F of the Dodd-Frank Wall 

Street Reform and Consumer Protection 

Act. 

DATES: Comments must be received on 

or before April 14, 2011. Comments on 

the Paperwork Reduction Act analysis 

set forth in Section III.A. of this Federal 

Register notice must be received on or 

before May 16, 2011. 

ADDRESSES: All comments will become 

a matter of public record. 

Comments should be addressed to: 

Board: You may submit comments, 

identified by Docket No. R–1407 and 

RIN No. RIN 7100–AD66, by any of the 

following methods: 

• Agency Web Site: http:// 

www.federalreserve.gov. Follow the 

instructions for submitting comments 

on the http://www.federalreserve.gov/

generalinfo/foia/ProposedRegs.cfm. 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• E-mail: 

regs.comments@federalreserve.gov. 

Include docket number in the subject 

line of the message. 

• FAX: 202–452–3819 or 202–452– 

3102. 

• Mail: Jennifer J. Johnson, Secretary, 

Board of Governors of the Federal 

Reserve System, 20th Street and 

Constitution Avenue, NW., Washington, 

DC 20551. All public comments are 

available from the Board’s Web site at 

http://www.federalreserve.gov/

generalinfo/foia/ProposedRegs.cfm as 

submitted, unless modified for technical 

reasons. Accordingly, your comments 

will not be edited to remove any 

identifying or contact information. 

Public comments may also be viewed 

electronically or in paper in Room MP– 

mstockstill on DSKH9S0YB1PROD with PROPOSALS