CRCM practice question 26 of 35

ABC Bank has an interactive Internet Web site at which it takes consumer credit applications. At the time an applicant completes an application on…

ABC Bank has an interactive Internet Web site at which it takes consumer credit applications. At the time an applicant completes an application on the Web site and submits it, the applicant also is asked for his or her email address. If the application is denied, ABC sends an adverse action notice to the applicant’s email address listed on the application. Using this procedure, what is ABC Bank’s responsibility?

Answer options

A: Post the notice on its Web site also

B: Send a paper notice by regular mail also

C: Use a credit scoring system

D: Obtain the applicant’s affirmative consent before sending the notice Correct answer

Correct Answer:

D. Obtain the applicant’s affirmative consent before sending the notice

Explanation

Under the Electronic Signatures in Global and National Commerce Act (E-SIGN Act), when a law like ECOA requires a notice to be provided in writing, it may be delivered electronically only if the consumer affirmatively consents. Simply collecting an email address during the application process does not constitute the required consent. The bank must first provide specific disclosures about electronic delivery and then obtain the applicant's affirmative consent in a way that reasonably demonstrates the applicant can access the electronic records.

Why Incorrect

A. Posting the notice on a website is not a required or sufficient method of delivery; direct delivery to the applicant is required.
B. Sending a paper notice is an alternative to electronic delivery, not a concurrent requirement if proper E-SIGN consent has been obtained.
C. The use of a credit scoring system is related to the credit decision itself, not the method of delivering the adverse action notice.

References

- Electronic Signatures in Global and National Commerce Act (E-SIGN Act), 15 U.S.C. § 7001(c). This section outlines the consumer consent provisions for using electronic records to satisfy a legal requirement for written information.

- Code of Federal Regulations, Title 12, Chapter X, Part 1002 (Regulation B), § 1002.4(d)(2). This section states that disclosures may be provided in electronic form, subject to compliance with the consumer consent and other applicable provisions of the E-SIGN Act.

- Consumer Financial Protection Bureau (CFPB), "ECOA Adverse Action Notice Requirements (Regulation B)," Official Interpretation, Comment 4(d)-2. This clarifies that E-SIGN consent requirements apply to electronic disclosures.

Keep practicing

Take the free CRCM practice test

Ten exam-style questions with answers and explanations, plus the exam facts and study guides.

Start the free practice test