Two new circulars providing other agencies guidance on the consumer financial protection agency’s policy on matters related to misuse of elements denoting the presence of federal bank deposit insurance and on adverse action notification requirements related to credit decisions based on complex algorithms were published Tuesday in the Federal Register.
The two circulars are the latest issued by the Consumer Financial Protection Bureau (CFPB) since its May 16 announcement (and circular) noting that it intended to begin publishing such documents. The aim, the agency said, is to provide guidance to other agencies, both federal and state, with consumer financial protection responsibilities on how the CFPB intends to enforce federal consumer financial law.
In its circular on deceptive representations of federal deposit insurance (Circular 2022-02), the agency responds to the question, “When do representations involving the name or logo of the Federal Deposit Insurance Corporation (FDIC) or about deposit insurance constitute a deceptive act or practice in violation of the Consumer Financial Protection Act (CFPA)? ”
Another circular (2022-03) on adverse action notices responds to the question, “When creditors make credit decisions based on complex algorithms that prevent creditors from accurately identifying the specific reasons for denying credit or taking other adverse actions, do these creditors need to comply with the Equal Credit Opportunity Act’s requirement to provide a statement of specific reasons to applicants against whom adverse action is taken?”
The two circulars were published May 17 and 26, respectively.
The agency said it will issue its Consumer Financial Protection Circulars to the broad set of government agencies responsible for enforcing Federal consumer financial law. The circulars are also available via the bureau’s own website.