Jump to Content
ABA: The American Bankers Association
Skip Section Navigation

Does a bank need to send an Adverse Action Notice to an applicant if it suspects fraud during the credit application/evaluation process?

If, during the credit application/evaluation process, the bank identifies applications it suspects or confirms fraud is involved, must it send an adverse action notice (AAN) to that “applicant”?

Arguably, if the bank confirms fraud, the bank is not required to provide an AAN based on Regulation B’s §1002.2 (c)(iv) definition of adverse action which excludes “A refusal to extend credit because applicable law prohibits the creditor from extending the credit requested.”

Alternatively, if the bank only suspects fraud, this could be a case of identity theft. The bank could provide an AAN based on its inability to verify identification information. If the applicant can resolve that issue, then the bank may make the loan. (April 2021)

Compliance Hotline

Have a compliance-related question? We're here to help. Members, reach us by phone or email.