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Overview

Adverse action notifications are a cornerstone of regulatory compliance in financial services. Mandated by the Equal Credit Opportunity Act (ECOA) and the Fair Credit Reporting Act (FCRA), they ensure applicants are informed promptly and transparently when a decision adversely affecting them is made. The Adverse Actions API streamlines recording these notices and associating them with the application or account they concern. An adverse action captures the reasons a customer was denied credit — or offered less favorable terms than requested — along with the purpose of the decision and the resource it relates to. Key characteristics:
  • Reason-bearing — a notice carries up to four principal reasons (a fifth may be required if one reason is inquiry-related).
  • Purpose-scoped — the purpose records the point in the account lifecycle the decision was made (e.g. ACCOUNT_OPENING, ACCOUNT_CLOSURE).
  • Associated — every notice is tied to an application or account via related_resource_id and related_resource_type.
  • Timely — the notice of adverse action (NOAA) must generally be delivered within 30 days of the credit decision.
A fintech must give customers specific reasons when credit is denied or terms are less favorable than requested — typically up to four principal reasons, plus a fifth if one is inquiry-related. Adverse actions apply across the credit lifecycle: account opening denial, denied line-increase request, penalty-based APR increase, account closure, and more.

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Prerequisites

This guide assumes you are familiar with:

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The adverse action object

See the API reference for the full schema.

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Recording adverse actions

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Example: a denied Line of Credit application

1

Record the adverse action notice

When an application to open a Line of Credit account is denied, record the notice with POST /v2/adverse_actions, scoped to the customer:
The response includes the system-generated id:
2

Link the notice to the application

Associate the adverse action with the applicant on the Line of Credit application using PATCH /v2/applications/{APPLICATION_ID}, and move the application to CREDIT_DENIED:

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Example: an account closed for delinquency

When a charge-secured account is closed due to delinquency, record the notice scoped to the account with related_resource_type set to ACCOUNT:

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Best practices

The notice of adverse action must generally be delivered within 30 days of the credit decision. Record the adverse action and notify the customer promptly to stay within the regulatory window.
  • Limit to principal reasons — provide up to four principal reasons, adding a fifth only when one reason is inquiry-related.
  • Always associate the notice — link every adverse action to its application (ACCOUNT_OPENING) or account (ACCOUNT_CLOSURE, APR increase, etc.).
  • Set an accurate notification_time — it anchors the compliance timeline; record when the customer was actually notified.
  • Cover the full lifecycle — record adverse actions for line-increase denials and penalty APR increases, not just openings and closures.

Create a Personal Customer

The customer an adverse action is scoped to.

Credit Applications

Link adverse actions to the applications they concern.

Line of Credit Accounts

The credit accounts adverse actions apply to.

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API reference