A retail bank is deploying an AI system that automatically denies credit card applications. Under ECOA and Regulation B, what notification requirement applies to each automated denial?
Select an answer to reveal the explanation.
Short Explanation
You've got to send an adverse action notice with specific reasons for the denial within 30 days. ECOA and Regulation B apply to all applicants, even when an AI model makes the decision.
Full Explanation
The correct requirement is that the bank must provide an adverse action notice stating the specific reasons for denial within 30 days. ECOA and Regulation B require creditors to give all applicants adverse action notices with specific reasons within 30 days, whether a human or an AI model decides. AI use does not exempt the bank. The protected-class-only view is wrong because notices apply to all applicants. The accuracy-statistics view is wrong because Regulation B does not require that disclosure. The validated-model exemption view is wrong because no such exemption exists.