An ECOA Adverse Action Notice is a written disclosure required by the Equal Credit Opportunity Act (15 U.S.C. § 1691c) and CFPB Regulation B, Section 1002.9 (https://www.consumerfinance.gov/rules-policy/regulations/1002/9/), that a creditor must provide within 30 days whenever it denies credit, revokes existing credit, changes terms unfavorably, or takes other adverse action on a credit application — stating the specific reasons for the action or advising the applicant of their right to request the reasons.
The adverse action notice requirement is a cornerstone of ECOA's anti-discrimination framework. Without mandatory disclosure of denial reasons, creditors could deny credit on discriminatory grounds without accountability. Regulation B Section 1002.9 requires creditors to: (1) notify the applicant of the action taken, (2) provide the specific reasons for denial or inform the applicant of their right to request reasons within 60 days, (3) provide the CFPB anti-discrimination notice, and (4) include the creditor's name and address. The CFPB's model adverse action notice forms appear in Appendix C to Regulation B. Timing requirements: For a completed application, the notice must be provided within 30 days of receiving the application. For an incomplete application, the creditor must notify the applicant within 30 days that the application is incomplete and what information is needed, or deny the application. If a creditor takes adverse action on an existing account (e.g., closing a line of credit, reducing a credit limit), the notice must be provided within 30 days of the decision — not when the applicant discovers the change. Credit score disclosure intersection: When a creditor uses a credit score in the adverse action decision, FCRA Section 615 (15 U.S.C. § 1681m) requires additional disclosures beyond Regulation B: the credit score used, the range of possible scores, the key factors that adversely affected the score (up to 4), the date the score was created, and the name of the agency that provided the score. The CFPB's combined adverse action model forms in Regulation B Appendix C include these FCRA disclosures (https://www.consumerfinance.gov/rules-policy/regulations/1002/c/). Small business applicant rights: ECOA and Regulation B apply to business credit as well as consumer credit — there is no small business carve-out for adverse action notices. A sole proprietor denied an SBA loan, MCA, equipment lease, or business credit card is entitled to the same adverse action notice as a consumer mortgage applicant. The CFPB's small business lending rule (Section 1071) is layering additional data collection requirements on top of the existing Regulation B framework, further expanding disclosure obligations for small business credit (https://www.consumerfinance.gov/rules-policy/rules-under-development/small-business-lending-data-collection/).
Under Regulation B Section 1002.9 (https://www.consumerfinance.gov/rules-policy/regulations/1002/9/), a complete adverse action notice must include: (1) a statement of the action taken (denial, revocation, or unfavorable change); (2) the name and address of the creditor; (3) either the specific principal reasons for the action (at least 2–4 reasons) or a disclosure of the applicant's right to request reasons within 60 days; (4) the CFPB's anti-discrimination statement. If a credit score was used, FCRA Section 615 requires additional score-related disclosures. Model forms are in Regulation B Appendix C.
Yes. Under ECOA and Regulation B, you are entitled to specific reasons for a credit denial. If the adverse action notice says only 'contact us for reasons,' you have 60 days to request a written explanation of the specific factors. The creditor must then provide reasons within 30 days of your request. Vague reasons like 'insufficient creditworthiness' are not compliant — Regulation B requires specific factors, such as 'debt-to-income ratio exceeds guideline,' 'insufficient time in business,' or 'derogatory credit history.' If you believe the denial was discriminatory, file a complaint with the CFPB at https://www.consumerfinance.gov/complaint/.
The application of ECOA to MCAs is unsettled but increasingly scrutinized. ECOA covers 'credit' transactions, and the CFPB has taken the position that revenue-based financing products structured as purchases of future receivables may still be credit for ECOA purposes depending on the facts. The CFPB's Section 1071 small business lending rule explicitly covers MCAs and revenue-based financing in its data collection requirements for covered institutions. Prudent MCA providers send adverse action-style notices even in ambiguous cases to avoid regulatory exposure. CFPB guidance is at https://www.consumerfinance.gov/rules-policy/regulations/1002/.