We believe that the Fair Credit Reporting Act (FCRA) would require your institution to provide adverse action notices to customers who apply for a checking account and are rejected, even if your institution offers the customer a “second chance” checking account with reduced limits and other features that differ from your normal checking accounts.

The FCRA defines “adverse action” to include decisions on any transaction initiated by a consumer that are “adverse to the interests of the consumer,” whether the decision is credit-related or not. 15 USC 1681a(k)(1)(B)(iv). The FCRA rules, in Regulation V, do not exempt counteroffers, such as offering a “second chance” checking account, from the definition of “adverse action” (unlike the Equal Credit Opportunity Act (ECOA) and Regulation B, which include a counteroffer exemption in 12 CFR 1002.2(c)(i)). If your institution rejects a customer’s application for a normal checking account, we believe this would be considered an adverse action under the FCRA and Regulation V definitions of “adverse action.” This is the case even though you may offer customers “second chance” checking accounts, since those accounts would have lower limits on ATM withdrawals and POS purchases.

However, note that the adverse action requirements in the ECOA rules (Regulation B) would not apply to a deposit account application. Regulation B’s adverse action notice requirement applies only to a refusal to grant “credit,” and we do not believe that a checking account (even one with overdraft privileges) would be considered a credit product. 12 CFR 1002.2(j).

Should your institution reject a customer’s application for a checking account, thus triggering the FCRA notice requirements, note that the FCRA adverse action requirements differ from the ECOA adverse action requirements. For example, the FCRA allows for “oral, written, or electronic” adverse action notices (15 USC 1681m(a)(1)), while the ECOA requires written notices (15 USC 1691(d)).