Quote:
Originally Posted by statman
I just read-up on it a bit & i remember what our lawyers used to quote us - First: (from 202.2)
Definition of adverse action: "(ii) A termination of an account or an unfavorable change in the terms of an account that does not affect all or substantially all of a class of the creditor’s accounts; "
In other words, if it DOES affect all or substantially all of my accounts - like an across-the-board reduction in unutilized credit line - and I don't use credit information in making that decision, it's not an adverse action situation and I don't need to notify the customer of anything.
The stated reasons for notifcation - as specified in Reg B - is to keep consumers informed and up-to-date about their credit information & how it is being used. If I make a lending/exposure/policy decision that is applied across the board and doesn't use credit information, I have no need to inform them. It has nothing to do with their credit...
|
I'm not sure any reasonably managed credit card portfolio has ever reduced lines on "all or substantially all" of the portfolio. If so then the Risk Management team needs to be fired - or hired b/c this would suggest a lack of true Risk Management as far as I'm concerned. Any line reduction strategy will be very targeted in nature due to the revenue and profitability implications of taking such action. You're comparing apples to oranges. I'm assuming that it wasn't a portfolio-wide reduction b/c there's no precedent for such drastic action that I'm aware of on a major card portfolio in the 10+ years I've spent working on various Top 10 US card portfolios. I view quarterly reports from VISA on industry trends and line reduction strategies only target a very small proportion of total accounts on the portfolio (<5%) on average - EVEN in this horrible credit environment where banks have ramped up such initiatives to try and mitigate losses.
Like I said previously, the laws and regulations are different in the case of inactive or delinquent accounts but this doesn't appear to be the case. Perhaps the original poster who posed the question has a card with a small bank or credit union and that type of drastic action may be the case (portfolio-wide reduction of credit line) but I assure you that it's not a card from a major issuer if it is. An adverse action letter would otherwise be required citing specific reasons (as required by Reg B) for the action and contact information if third party information, i.e. - credit bureau, etc., is used in the decision (as required by FCRA).