# CFPB Circular 2023-03: Adverse action notification requirements and the proper use of the CFPB's sample forms provided in Regulation B

Source: https://www.bankingnewsai.com/ai-regulation/documents/cfpb-circular-2023-03
Last updated: Aug 26, 2026

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 The circular was withdrawn on May 12, 2025.

## At a glance

| Field | Value |
| --- | --- |
| Authority | [CFPB](https://www.bankingnewsai.com/ai-regulation/cfpb) |
| 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| Status | Withdrawn |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 |
| Official text | https://www.consumerfinance.gov/compliance/circulars/circular-2023-03-adverse-action-notification-requirements-and-the-proper-use-of-the-cfpbs-sample-forms-provided-in-regulation-b/ |

## Key points

- 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- Listed on the Withdrawn Guidance page as withdrawn May 12, 2025.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 changed 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.

## Use cases it governs

- [Credit scoring & underwriting](https://www.bankingnewsai.com/ai-regulation/by-use-case#credit-underwriting)
- [Fair lending & discrimination](https://www.bankingnewsai.com/ai-regulation/by-use-case#fair-lending)
- [Data & privacy](https://www.bankingnewsai.com/ai-regulation/by-use-case#data-privacy)

> Superseded by [CFPB withdrawal of 67 guidance documents (May 2025)](https://www.bankingnewsai.com/ai-regulation/documents/cfpb-guidance-withdrawal-2025).

## FAQ

### 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.

## Compare

- [OCC vs CFPB on AI lending](https://www.bankingnewsai.com/ai-regulation/compare/occ-vs-cfpb-ai-lending): OCC vs CFPB on AI in Lending: Model Risk vs Consumer Law

## Related documents

- [CFPB withdrawal of 67 guidance documents (May 2025)](https://www.bankingnewsai.com/ai-regulation/documents/cfpb-guidance-withdrawal-2025) — Interpretive Rules, Policy Statements, and Advisory Opinions; Withdrawal (May 12, 2025)
- [Regulation B final rule on disparate impact (April 2026)](https://www.bankingnewsai.com/ai-regulation/documents/cfpb-regulation-b-final-rule-2026) — Equal Credit Opportunity Act (Regulation B) — final rule amending disparate impact, discouragement and special purpose credit program provisions (Apr 22, 2026)
- [CFPB comment to Treasury on AI in financial services (2024)](https://www.bankingnewsai.com/ai-regulation/documents/cfpb-comment-treasury-ai-rfi-2024) — CFPB Comment on Request for Information on Uses, Opportunities, and Risks of Artificial Intelligence in the Financial Services Sector (Aug 12, 2024)
- [CFPB Chatbots in Consumer Finance (issue spotlight, 2023)](https://www.bankingnewsai.com/ai-regulation/documents/cfpb-chatbots-in-consumer-finance-2023) — Chatbots in consumer finance (Jun 6, 2023)
- [Joint Statement on Automated Systems (CFPB, DOJ, EEOC, FTC)](https://www.bankingnewsai.com/ai-regulation/documents/cfpb-joint-statement-automated-systems-2023) — Joint Statement on Enforcement Efforts Against Discrimination and Bias in Automated Systems (Apr 25, 2023)
- [CFPB Circular 2022-03](https://www.bankingnewsai.com/ai-regulation/documents/cfpb-circular-2022-03) — Adverse action notification requirements in connection with credit decisions based on complex algorithms (May 26, 2022)
- [CFPB Innovation Spotlight on AI/ML adverse action notices (2020)](https://www.bankingnewsai.com/ai-regulation/documents/cfpb-innovation-spotlight-ai-ml-adverse-action-2020) — Innovation spotlight: Providing adverse action notices when using AI/ML models (Jul 7, 2020)
- [ECOA / Regulation B adverse action (15 U.S.C. 1691(d); 12 CFR 1002.9)](https://www.bankingnewsai.com/ai-regulation/documents/cfpb-ecoa-regulation-b-adverse-action) — Equal Credit Opportunity Act section 701(d) and Regulation B section 1002.9 — notification of adverse action and statement of specific reasons (Oct 28, 1974)

Last reviewed Aug 26, 2026. Cite the official text (https://www.consumerfinance.gov/compliance/circulars/circular-2023-03-adverse-action-notification-requirements-and-the-proper-use-of-the-cfpbs-sample-forms-provided-in-regulation-b/) for the rule and this page for the summary and dates.

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