CFPB, Federal Agencies, State Agencies, and Attorneys General
On June 28, a group of plaintiffs filed a class action lawsuit against OpenAI—creator and publisher of the generative artificial intelligence (AI) tool ChatGPT—as well as OpenAI’s primary investor, Microsoft. The 151-page complaint is the first significant U.S. class action to assert that generative AI tools violate consumer privacy rights.
The Complaint, filed in the Northern District of California, challenges the core of the generative AI models. … Continue Reading
A group of four Democratic members of the Senate Banking Committee, including Chairman Sherrod Brown, recently sent a letter to CFPB Director Chopra to express their concerns regarding the emergence of voice cloning technology and its potential exploitation in financial scams. The Senators ask the CFPB to “review the risks posed by this new technology as soon as practicable and take action under the CFPB’s existing authorities to protect consumers.”… Continue Reading
On June 16, 2023, Michael J. Hsu, Acting Comptroller of the Currency delivered remarks to the American Bankers Association Risk and Compliance Conference in San Antonio, Texas. In his remarks, Hsu discussed both the benefits and risks of artificial intelligence (“AI”) and tokenization. The core of Hsu’s remarks is that, given the rapid innovation of AI and tokenization in banking, banks should closely work with regulators to manage technological risks.… Continue Reading
Following recent Senate testimony in which OpenAI CEO Sam Altman proposed additional Congressional oversight for the development of artificial intelligence (AI), Colorado Senator Michael Bennet has re-introduced the Digital Platform Commission Act, a bill that would enable the creation of a federal agency to oversee the use of AI by digital platforms. … Continue Reading
The CFPB, FTC, Justice Department, and Equal Employment Opportunity Commission have issued a joint statement about enforcement efforts “to protect the public from bias in automated systems and artificial intelligence.” The CFPB also issued a separate press release and prepared remarks by Director Chopra about the statement. In the press release, the CFPB indicated that it “will 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.”… Continue Reading
We begin with a discussion of the goals and themes of FTA’s recent summit and AFC’s advocacy regarding retention of the strategic plan option under the Community Reinvestment Act. We then discuss consumer benefits of buy-now-pay-later (BNPL) and regulatory concerns raised by the CFPB in its BNPL report, state level regulatory issues facing fintechs, the Treasury’s report on bank/fintech relationships and takeaways for fintechs, consumer benefits of earned wage access products and artificial intelligence and regulatory concerns raised by the CFPB, and reactions to the CFPB’s Section 1033 rulemaking.… Continue Reading
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
The White House’s Office of Science and Technology Policy has identified a framework of five principles, also known as the “Blueprint for an AI Bill of Rights,” that is intended to guide the design, use, and deployment of automated systems and artificial intelligence (AI). The Blueprint defines automated systems broadly as any system, software, or process that uses computation to determine outcomes, make or aid decisions, inform implementation, collect data, or otherwise interact with individuals or communities. … Continue Reading
Together with our special guest whose company provides software enabling lenders to use AI to underwrite loans, we explore a wide range of issues of importance to lenders using AI to underwrite loans. Our discussion topics include: the CFPB’s position on how ECOA adverse action notice requirements apply to credit decisions based on the use of AI; what is meant by explainability and interpretability of AI; fair lending and other compliance risks and steps to reduce risk; preparing for CFPB exams; and the CFPB’s call for tech workers to act as whistleblowers to report potential discrimination arising from the use of AI.… Continue Reading
In their June 2021 request for information regarding financial institutions’ use of artificial intelligence (AI), including machine learning, the CFPB and federal banking regulators flagged fair lending concerns as one of the risks arising from the growing use of AI by financial institutions.
Last week, in an apparent effort to increase its scrutiny of machine learning models and those that use alternative data, the CFPB published a blog post titled “CFPB Calls Tech Workers to Action,” in which it made a direct appeal to “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 to us.”… Continue Reading
