A bill now being considered by the Council of the District of Columbia titled the “Stop Discrimination by Algorithms Act of 2021” (“Bill”), would impose limitations and requirements on businesses that use algorithms in making credit and other eligibility decisions, including decisions regarding the individuals to whom a business directs advertising or marketing solicitations. … Continue Reading
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CFPB enters into consent order with fintech company to resolve alleged UDAAP practices arising from use of algorithm
By Michael Gordon & Michael R. Guerrero on
The CFPB announced that it has entered into a consent order with Hello Digit, LLC (“Digit”) to settle the CFPB’s claims that Digit engaged in deceptive acts and practices in connection with an automated savings tool it offered to consumers. The settlement requires Digit to pay a $2.7 million civil money penalty and at least $68,145 in consumer redress.… Continue Reading
CFPB issues new circular on application of ECOA adverse action notice requirements to credit decisions using algorithms
By Michael Gordon & John L. Culhane, Jr. on
Under Director Chopra’s leadership, the CFPB has regularly been sounding alarms about the potential for discrimination arising from the use of so-called “black box” credit models that use algorithms or other artificial intelligence (AI) tools. Today, in the second of its recently-launched Consumer Financial Protection Circulars, the CFPB addresses ECOA adverse action notice requirements in connection with credit decisions based on algorithms.… Continue Reading
FTC offers advice on use of artificial intelligence and algorithms
By Ballard CFS Group on
Andrew Smith, Director of the FTC Bureau of Consumer Protection, has written a blog post, “Using Artificial Intelligence and Algorithms,” in which the FTC “offer[s] important lessons about how companies can manage the consumer protection risks of AI and algorithms.”
The blog post makes the following key points:
- Transparency. Companies that use AI tools, such as chatbots, to interact with customers should not mislead consumers about the nature of the interaction and also should not mislead consumers about how sensitive data is being collected.
Petition filed with FTC seeking investigation of “secret surveillance scores”
By John L. Culhane, Jr. on
The Consumer Education Foundation, a California-based nonprofit consumer advocacy organization, has filed a petition with the FTC asking it to investigate the use of “secret surveillance scores” in the U.S. marketplace.
Such scores are claimed to be the product of analytics companies that “amass thousands or even tens of thousands of demographic and lifestyle data points about consumers, with the help of an estimated 121 data brokers and aggregators who are able to purchase our personal data from consumer-facing companies across the global marketplace.” … Continue Reading