On May 26, 2022, the CFPB issued Circular 2022-03 explaining a creditor’s responsibility to comply with ECOA’s requirement to provide a statement of specific reasons when adverse action is taken against an applicant based on complex algorithms that prevent the creditor from accurately identifying the specific reasons for denying credit or taking other adverse action.


Circular 2022-03 states, “ECOA and Regulation B do not permit creditors to use complex algorithms when doing so means they cannot provide the specific and accurate reasons for adverse actions.”


Full Memorandum