American Banker, June 30, 2021, Fintechs Seek CFPB Guidance on Making AI-Based Lending Fair
Six fintech companies and the National Community Reinvestment Coalition are asking the Consumer Financial Protection Bureau to provide guidance on how to use artificial intelligence in lending decisions without running afoul of fair-lending laws.
In a letter sent Tuesday to the CFPB, the six companies — Affirm, LendingClub, Oportun, PayPal Holdings, Square and Varo Bank — publicly commit to uphold the “disparate impact” legal doctrine that has been widely unpopular with financial institutions. The legal theory of disparate impact, which is a component of the Fair Housing Act and other fair-lending laws,maintains that a policy is illegal if it has a discriminatory effect on a protected class, but it may not be illigal if there is a business purpose that serves a “substantial, legitimate, nondiscriminatory interest.”
