(a) Administrative enforcement
and civil liability. A violation of section 704B of the Act or
this subpart is subject to administrative sanctions and civil liability
as provided in sections 704 (15 U.S.C. 1691c) and 706 (15 U.S.C. 1691e)
of the Act, where applicable.
(b) Bona fide errors. A bona fide error in compiling, maintaining,
or reporting data with respect to a covered application is one that
was unintentional and occurred despite the maintenance of procedures
reasonably adapted to avoid such an error. A bona fide error is not
a violation of the Act or this subpart. A financial institution is
presumed to maintain procedures reasonably adapted to avoid such errors
with respect to a given data field if the number of errors found in
a random sample of the financial institution’s submission for
the data field does not equal or exceed a threshold specified by the
Bureau for this purpose in appendix F to this part. However, an error
is not a bona fide error if either there is a reasonable basis to
believe the error was intentional or there is evidence that the financial
institution does not or has not maintained procedures reasonably adapted
to avoid such errors.
(c) Safe harbors.
(1) Incorrect
entry for application date. A financial institution does not
violate the Act or this subpart if it reports on its small business
lending application register an application date that is within three
business days of the actual application date pursuant to section 1002.107(a)(2).
(2) Incorrect
entry for census tract. An incorrect entry for census tract is
not a violation of the Act or this subpart if the financial institution
obtained the census tract by correctly using a geocoding tool provided
by the FFIEC or the Bureau.
(3) Incorrect entry for NAICS code. An incorrect
entry for a 3-digit NAICS code is not a violation of the Act or this
subpart, provided that the financial institution obtained the 3-digit
NAICS code by:
(i)
Relying on an applicant’s representations or on an appropriate
third-party source, in accordance with section 1002.107(b), regarding
the NAICS code; or
(ii) Identifying
the NAICS code itself, provided that the financial institution maintains
procedures reasonably adapted to correctly identify a 3-digit NAICS
code.
(4) Incorrect determination of small business status,
covered credit transaction, or covered application. A financial
institution that initially collects data regarding whether an applicant
for a covered credit transaction is a minority-owned business, a women-owned
business, or an LGBTQI+-owned business, and the ethnicity, race, and
sex of the applicant’s principal owners pursuant to section
1002.107(a)(18) and (19) but later concludes that it should not have
collected such data does not violate the Act or this regulation if
the financial institution, at the time it collected this data, had
a reasonable basis for believing that the application was a covered
application for a covered credit transaction from a small business
pursuant to sections 1002.103, 1002.104, and 1002.106, respectively.
A financial institution seeking to avail itself of this safe harbor
shall comply with the requirements of this subpart as otherwise required
pursuant to sections 1002.107, 1002.108, and 1002.111 with respect
to the collected data.
