An adverse action notice is the disclosure the federal Fair Credit Reporting Act (FCRA) requires when you take an adverse action against an applicant based even in part on a consumer report — a credit or background check. In housing, that covers denying the application, charging a higher deposit or rent, or requiring a co-signer or guarantor.
The notice must generally identify the consumer-reporting agency that supplied the report, state that the agency did not make the decision, and tell the applicant they can get a free copy of the report and dispute its accuracy. The purpose is to give a rejected applicant a fair chance to see and correct the information used against them.
Because getting this wrong carries real legal exposure, the underlying decision — denying an applicant — is the kind of act a responsible autonomous system keeps human-gated: the software can assemble the file and draft the notice, but a person makes the call. Notice contents and timing are governed by federal rules and can involve state requirements too; this is general education, not legal advice.
This is general educational information, not legal or tax advice. Rules vary by state and locality and change over time — check your local law and confirm specifics with a qualified professional.