Adverse Actions

In the complex landscape of financial services, adherence to regulatory requirements is not merely a formality but an imperative for transparent and ethical operations. The implementation of adverse action notifications is a cornerstone of this commitment. Mandated by regulations like the Equal Credit Opportunity Act (ECOA) and the Fair Credit Reporting Act (FCRA), these notifications ensure that applicants are informed promptly and transparently when a decision adversely affecting them is made based on certain criteria. By incorporating adverse action procedures, the fintech not only fortifies their compliance with critical regulations, but also upholds their dedication to fairness, transparency, and respect for the consumers. This API guide is designed to streamline this important process, ensuring that our technology solutions remain in lockstep with our regulatory commitments.

A fintech shall provide customers specific reasons if credit is denied, or if the terms offered are less favorable than those requested. Typically, a fintech is only required to provide up to four principal reasons. If one of the four reasons is inquiry-related, the fintech may need to provide a 5th reason. Also typically, the notice of adverse actions (NOAA) must be provided within 30 days of the credit decision. This includes decisions made during the lifecycle of a credit account: account opening, line increase request denied, penalty-based APR increase, account closure, etc. The NOAA shall be always associated with an application or an account.

Example

Application to open a Line of Credit account is denied - POST /v1/adverse_actions

Record detailed information of adverse action notice

   curl -X POST \
       -H 'Authorization: Bearer $apikey' \
       -H 'Content-Type: application/json' \
       -d '
        {
        "notification_time": "2020-05-19T21:14:27.434964Z",
        "purpose": "ACCOUNT_OPENING",
        "reasons": [
          "TOO_MANY_INQUIRIES",
          "INSUFFICIENT_CREDIT_HISTORY"
        ],
        "related_resource_id": "9337a443-fa03-471c-ab05-b138c41dbd17",
        "related_resource_type": "CUSTOMER"
      }' $baseurl/v1/adverse_actions

Sample response body:

{
   "notification_time": "2020-05-19T21:14:27.434964Z",
   "purpose": "ACCOUNT_OPENING",
   "reasons": [
     "TOO_MANY_INQUIRIES",
     "INSUFFICIENT_CREDIT_HISTORY"
   ],
   "related_resource_id": "9337a443-fa03-471c-ab05-b138c41dbd17",
   "related_resource_type": "CUSTOMER",
   "creation_time": "2023-09-19T15:48:24.10184Z",
   "id": "2fb2858b-f859-4dc8-9ad2-2a4e596fed89",
   "last_updated_time": "2023-09-19T15:48:24.10184Z"
 }

Link adverse action to the Line of Credit application - PATCH /v1/applications/{APPLICATION_UUID}

curl -X PATCH \
    -H 'Content-Type: application/json' \
    -d '
    {
        "applicants": [
          {
            "adverse_action_id": "2fb2858b-f859-4dc8-9ad2-2a4e596fed89",
            "customer_id": "4a666a01-d23a-47b1-8c20-2eb5a923da35",
            "is_primary": true
          }
        ],
        "status": "CREDIT_DENIED", 
    }' $baseurl/v1/applications/{APPLICATION_UUID}

Sample response body:

  {
    "account_type": "LINE_OF_CREDIT",
    "applicants": [
      {
        "adverse_action_id": "2fb2858b-f859-4dc8-9ad2-2a4e596fed89",
        "customer_id": "4a666a01-d23a-47b1-8c20-2eb5a923da35",
        "is_primary": true
      }
    ],
    "purpose": "ACCOUNT_OPENING",
    "status": "CREDIT_DENIED",
    "type": "CREDIT",
    "creation_time": "2022-10-26T19:14:45.861687Z",
    "id": "ebda67f0-e0a7-41e2-98ed-0617a1e815a6",
    "last_updated_time": "2023-09-20T00:31:10.255042Z"
}

a charge secured account is closed due to delinquency status - POST /v1/adverse_actions

Record detailed information of adverse action notice with related account id.

   curl -X POST \
       -H 'Authorization: Bearer $apikey' \
       -H 'Content-Type: application/json' \
       -d '
        {
        "notification_time": "2020-05-19T21:14:27.434964Z",
        "purpose": "ACCOUNT_CLOSURE",
        "reasons": [
          "FRAUDULENT_ACTIVITIES"
        ],
        "related_resource_id": "9337a443-fa03-471c-ab05-c538c41dbd17",
        "related_resource_type": "ACCOUNT"
      }' $baseurl/v1/adverse_actions

Sample respones body:

{
   "notification_time": "2020-05-19T21:14:27.434964Z",
   "purpose": "ACCOUNT_CLOSURE",
   "reasons": [
     "FRAUDULENT_ACTIVITIES"
   ],
   "related_resource_id": "9337a443-fa03-471c-ab05-c538c41dbd17",
   "related_resource_type": "ACCOUNT",
   "creation_time": "2023-09-19T15:48:24.10184Z",
   "id": "2fb2858b-f859-4dc8-9ad2-3b4e596fed89",
   "last_updated_time": "2023-09-19T15:48:24.10184Z"
 }