WASHINGTON— With vendors to credit unions increasingly touting AI-based solutions, four federal agencies have issued a statement saying they will uphold “America’s commitment to the core principles of fairness, equality, and justice” as emerging automated systems, including those sometimes marketed as “artificial intelligence” have become increasingly common in consumers daily lives.
The technology is having an effect on civil rights, fair competition, consumer protection, and equal opportunity.
The Civil Rights Division of the United States Department of Justice, the Consumer Financial Protection Bureau, the Federal Trade Commission, and the U.S. Equal Employment Opportunity Commission released the joint statement “outlining a commitment to enforce their respective laws and regulations.”
All four agencies said they have previously expressed concerns about potentially harmful uses of automated systems and resolved to vigorously enforce their collective authorities and to monitor the development and use of automated systems.
Regulators Need to ‘Stay Ahead’
“Technology marketed as AI has spread to every corner of the economy, and regulators need to stay ahead of its growth to prevent discriminatory outcomes that threaten families’ financial stability,” said CFPB Director Rohit Chopra.
Added FTC Chair Lina M. Khan, “We already see how AI tools can turbocharge fraud and automate discrimination, and we won’t hesitate to use the full scope of our legal authorities to protect Americans from these threats. Technological advances can deliver critical innovation—but claims of innovation must not be covered for lawbreaking. There is no AI exemption to the laws on the books, and the FTC will vigorously enforce the law to combat unfair or deceptive practices or unfair methods of competition.”
According to the four government entities, the joint statement follows a series of CFPB actions to ensure advanced technologies do not violate the rights of consumers.
Specific Steps
Specifically, the CFPB noted it has taken steps to protect consumers from:
- Black box algorithms. In a May 2022, circular the CFPB reminded it advised that when the technology used to make credit decisions is too complex, opaque, or new to explain adverse credit decisions, companies cannot claim that same complexity or opaqueness as a defense against violations of the Equal Credit Opportunity Act.
- Algorithmic marketing and advertising. In August 2022, the CFPB reminded it issued an interpretive rule stating when digital marketers are involved in the identification or selection of prospective customers or the selection or placement of content to affect consumer behavior, they are typically service providers under the Consumer Financial Protection Act. “When their actions, such as using an algorithm to determine who to market products and services to, violate federal consumer financial protection law, they can be held accountable,” the CFPB said.
- Abusive use of AI technology. As CUToday.info reported, earlier this month, the CFPB issued a policy statement to explain abusive conduct. The statement is about unlawful conduct in consumer financial markets generally, but the prohibition would cover abusive uses of AI technologies to, for instance, obscure important features of a product or service or leverage gaps in consumer understanding, the Bureau said.
- Digital redlining. The CFPB said it has prioritized digital redlining, including bias in algorithms and technologies marketed as AI. As part of this effort, the CFPB is working with federal partners to protect homebuyers and homeowners from algorithmic bias within home valuations and appraisals through rulemaking.
- Repeat offenders’ use of AI technology. The CFPB proposed a registry to detect repeat offenders. The registry would require covered nonbanks to report certain agency and court orders connected to consumer financial products and services. The registry would allow the CFPB to track companies whose repeat offenses involved the use of automated systems.
Blowing The Whistle
In addition, the CFPB said it has also launched a way for tech workers to blow the whistle.
“The CFPB encourages engineers, data scientists and others who have detailed knowledge of the algorithms and technologies used by companies and who know of potential discrimination or other misconduct within the CFPB’s authority to report it,” the Bureau said, adding its subject-matter experts review and assess credible tips, and the CFPB’s process ensures that all credible tips receive appropriate analysis and investigation.
Additional Steps
In addition, the CFPB said it will:
- Continue to monitor the development and use of automated systems, including AI-marketed technology, and will work closely with the Civil Rights Division of the DOJ, FTC, and EEOC to enforce federal consumer financial protection laws and to protect the rights of American consumers, regardless of whether legal violations occur through traditional means or advanced technologies.
- Release a white paper this Spring discussing the current chatbot market and the technology’s limitations, its integration by financial institutions, and the ways the CFPB is already seeing chatbots interfere with consumers’ ability to interact with financial institutions.