Compliance Q&A: An Adverse Action Notice
Is a credit union required to send an adverse action notice when it terminates a delinquent credit card account?
Q: Is a credit union required to send an adverse action notice when it terminates a delinquent credit card account according to the terms of the card agreement?
A: No. It’s not considered adverse action if the credit union terminates an account “in connection with inactivity, default, or delinquency as to that account.” In addition, the Fair Credit Reporting Act defers to the Regulation B definition of adverse action when loans are involved. So, the credit union wouldn’t have to send an adverse action notice. But the credit union should still send a letter notifying the member the account has been terminated. (Regulation B, Sec. 1002.2(c)(2)((ii))
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