Circular 2023-03, issued September 19, 2023 (published at 89 FR 27361 in April 2024), addressed lenders using AI and other complex models that consider data not on the Regulation B sample forms. It stated that creditors may not rely solely on the checklist of reasons in sample form C-1 and must disclose the actual principal reasons, even where the factor — such as an applicant's purchasing behavior — is unexpected or not on the form. The circular was withdrawn on May 12, 2025.
| Document | CFPB Circular 2023-03 — Adverse action notification requirements and the proper use of the CFPB's sample forms provided in Regulation B |
| Issued by | Consumer Financial Protection Bureau |
| Type | Circular |
| Status | Withdrawn |
| Published | Sep 19, 2023 |
| Effective | Sep 19, 2023 |
| Applies to | All creditors subject to ECOA and Regulation B, particularly those using AI or other complex models with non-traditional data |
| Superseded by | CFPB withdrawal of 67 guidance documents (May 2025) |
| Official source | consumerfinance.gov ↗ |
| Use cases | Credit scoring & underwriting · Fair lending & discrimination · Data & privacy |
What are the key points of CFPB Circular 2023-03?
- Extends Circular 2022-03: the sample forms in Appendix C are illustrative; a creditor must state the specific reason actually used, not the closest listed reason.
- Applies where models consider unconventional data, including data harvested from consumer surveillance or behavioral data.
- Reasons must be specific enough to let the applicant understand and act on them.
- Announced with a September 19, 2023 press release, 'CFPB Issues Guidance on Credit Denials by Lenders Using Artificial Intelligence'.
- Listed on the Withdrawn Guidance page as withdrawn May 12, 2025.
What did CFPB Circular 2023-03 change for banks?
It closed the gap left by the sample forms: banks using alternative-data or ML models could no longer map model outputs to generic checklist reasons. Even after withdrawal, the Regulation B Official Interpretation it relied on still says sample-form reasons that were not actually used do not satisfy the notice requirement.
Can a lender use the Regulation B sample form checklist for AI model denials?
Only if the checked reasons are the principal factors the model actually used. Circular 2023-03 (now withdrawn) and the Regulation B Official Interpretation both say a creditor cannot simply select the closest listed reason.
| Date | Document | Status |
|---|---|---|
| May 12, 2025 | CFPB withdrawal of 67 guidance documents (May 2025) — Interpretive Rules, Policy Statements, and Advisory Opinions; Withdrawal | In force |
| Apr 22, 2026 | Regulation B final rule on disparate impact (April 2026) — Equal Credit Opportunity Act (Regulation B) — final rule amending disparate impact, discouragement and special purpose credit program provisions | In force |
| Aug 12, 2024 | CFPB comment to Treasury on AI in financial services (2024) — CFPB Comment on Request for Information on Uses, Opportunities, and Risks of Artificial Intelligence in the Financial Services Sector | Final |
| Jun 6, 2023 | CFPB Chatbots in Consumer Finance (issue spotlight, 2023) — Chatbots in consumer finance | Final |
| Apr 25, 2023 | Joint Statement on Automated Systems (CFPB, DOJ, EEOC, FTC) — Joint Statement on Enforcement Efforts Against Discrimination and Bias in Automated Systems | Final |
| May 26, 2022 | CFPB Circular 2022-03 — Adverse action notification requirements in connection with credit decisions based on complex algorithms | Withdrawn |
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