The CFPB and FTC have filed a joint amicus brief in the U.S. Court of Appeals for the Second Circuit urging the court to reverse a district court ruling that an individual who had already received credit from the defendant and who was not currently applying to the defendant for credit was not an “applicant” for purposes of the ECOA’s adverse action notice requirement.
The ECOA defines an “applicant” to mean “any person who applies to a creditor directly for an extension, renewal, or continuation of credit, or applies to a creditor indirectly by use of an existing credit plan for an amount exceeding a previously established credit limit.” 15 U.S.C. 1691a(b). As defined by Regulation B, an “applicant” includes “any person who requests or who has received an extension of credit from a creditor.” Both the ECOA and Regulation B require a creditor to provide a statement of the reasons for adverse action to an “applicant.”
In Tewinkle v. Capital One, N.A., the plaintiff had a checking account and overdraft line of credit with the defendant bank. The plaintiff filed a lawsuit against the bank alleging that the notice sent to him by the bank that it was terminating his checking account and overdraft line did not comply with the adverse action notice requirement in ECOA and Regulation B. The bank moved to dismiss, arguing that plaintiff was not an “applicant” entitled to notice of adverse action under the ECOA because he was not applying for credit at the time his account was closed. The magistrate judge agreed with the bank’s reading of the ECOA and recommended that the complaint be dismissed. (The magistrate also concluded that the plaintiff had not suffered an “injury in fact.”) The district court adopted the magistrate judge’s recommendation without change or further analysis.
In their amicus brief, the CFPB and FTC argue that, despite the wording of the ECOA’s definition of the term “applicant,” the “better reading” of the ECOA is to interpret the statutory language to include “those who have applied for and received credit.” According to the agencies, the reading they urge is “consistent with [the ECOA’s] text, structure, and purpose.”
The agencies also argue that Regulation B’s definition of “applicant,” which expressly includes an individual “who has received an extension of credit from the creditor” is entitled to Chevron deference.