I have a question related to adverse action notification requirements under the Fair Credit Reporting Act (FCRA) for deposit account applications.

Yes, an adverse action notice is required. Under §615(a), a person using a consumer report must provide an adverse action notice if it takes “any adverse action…based in whole or in part on any information contained in a consumer report.” Under §603((d), a ChexSystems report is a consumer report, as it is a communication of information by a consumer reporting agency bearing on the consumer’s character, generally reputation, personal characteristics, credit capacity, credit standing etc. for the purposes of establishing the consumer’s eligibility for a business transaction. A consumer reporting agency is a person who regularly engages in the practice of assembling or evaluating consumer credit information “or other information” on consumers for the purpose of furnishing consumer reports to third parties. (§603(f))Thus ChexSystems is a consumer reporting agency and their reports are “consumer reports.”

Denying a deposit account is an adverse action under §603(k)(1)(B)(iv).

FCRA’s §609(f)(2)(a) determines whether the QualiFile score generated by ChexSystems must be disclosed in the adverse action notice. That section defines credit score as a “numerical value or a categorization derived from a statistical tool or modeling system used by a person who makes or arranges a loan to predict the likelihood of certain credit behaviors…” [Emphasis added] (§609(f)(2)(a))

The definition does not refer to the purpose for which a particular bank is using the score (in this case, deposit account opening), but whether others use it to make credit decisions. If, for example, QualiFile uses a score that others use for loan application decisions, it should be included in the adverse action notice even when used for non-credit decisions.

Shortly after the provision regarding credit score disclosures went into effect, ChexSystems issued guidance indicating that its QualiFile Score (ChexSystems Consumer Score) is a credit score under FCRA. Banks may need to verify that this is still its position. (Response provided February 2024.)