Permissibility Of Broker Providing Adverse Action Notices On Behalf Of Lender
Mass. Gen. Laws chapter 93, section 62 governs adverse action disclosure requirements and requires that "users" of the consumer report provide certain written notifications to consumers against whom an adverse action has been taken. M.G.L. c. 93 § 50 defines a "user" as "any person seeking or obtaining a consumer report for purposes authorized in section fifty-one." The Division considers lenders to be users under this statute.
Federal regulations implementing the Equal Credit Opportunity Act, at 12 C.F.R. 202.9 outline requirements for adverse action notifications. 12 C.F.R. 202.9(g) permits creditors taking adverse action to comply "directly or through a third party" and allows them to give notice through a third party so long as the creditor is identified as the party taking the adverse action.
The Division is of the opinion that the creditor or lender is the "user" according to section 50 and therefore is required to prepare notices and ensure that the notices are provided to consumer applicants. A lender may delegate the delivery of said notice to a third party, such as a broker, provided that the notice is prepared by the creditor and the broker's role is limited to delivery only. Notice preparation and delivery should be done in a manner which clearly identifies that the delivering agent is not involved in the underwriting and adverse action decision.