On May 26, 2022, the Consumer Financial Protection Bureau (CFPB) published a circular confirming that creditors making credit decisions based on complex algorithms must still comply with the requirement under the Equal Credit Opportunity Act (ECOA) and Regulation B to provide a statement of specific reasons to applicants against whom adverse action is taken.

Under the ECOA, creditors must provide a statement of specific reasons in writing to an applicant against whom adverse action is taken. Additionally, under Regulation B, creditors must provide a specific statement of the principal reasons for an adverse action. These notice requirements are intended to protect consumers and provide consumer education.

Adverse actions include:

Many creditors make credit decision by relying on detailed databases to power complex algorithms (sometimes called "black-box" models). In some cases, the reasoning for their credit decisions is unknown since the technology used to evaluate the applications is too complicated or opaque. The circular makes clear that such creditors may not justify non-compliance with ECOA just because the technology they use to evaluate credit applications is too complicated or opaque in its decision-making. Such creditors must still provide a notice that discloses the specific, principal reasons for taking any adverse actions. CFPB Director Rohit Chopra stated that "companies are not absolved of their legal responsibilities when they let a black-box model make lending decisions."