what fair lending law requires notice of adverse action?

The fair lending law that requires a notice of adverse action is the Equal Credit Opportunity Act (ECOA) , implemented by Regulation B.

Core rule in one line

When a creditor takes “adverse action” on a credit application (for example, denies a loan or reduces a credit line), ECOA/Regulation B requires that the applicant receive an adverse action notice explaining what happened and why.

What counts as adverse action?

• A refusal to grant credit in the amount or on the terms requested.

• A termination of an existing credit account or an unfavorable change in terms that does not affect all or substantially all similar accounts.

• A refusal to increase an existing credit line after a request for an increase.

What ECOA/Reg B require in the notice

Under ECOA’s Regulation B:

• The notice must generally be in writing and provided within set time frames (often within 30 days of a completed application).

• It must state the action taken , provide an ECOA notice including the relevant federal enforcement agency, and either:
  • Give the specific principal reasons for the adverse action, or
  • Tell the applicant they may request those reasons, with contact information and deadline.

How FCRA fits in (but is not the “fair lending” law)

• If the decision is based on a consumer report , the Fair Credit Reporting Act (FCRA) also requires an adverse action notice with additional content (like the name of the credit bureau).

• However, FCRA is a broader consumer reporting law; the primary fair lending statute that creates the general adverse action notice obligation in credit decisions is ECOA/Regulation B.

Quick takeaway

If the question is “what fair lending law requires notice of adverse action?”, the precise answer is:

The Equal Credit Opportunity Act (ECOA), as implemented by Regulation B, requires creditors to provide adverse action notices.

TL;DR: ECOA/Regulation B is the fair lending law that requires adverse action notices for credit decisions, with FCRA adding extra notice requirements when a consumer report is used.

Information gathered from public forums or data available on the internet and portrayed here.