Consumer Federation of America, January 3, 2024, The CFPB Has An Opportunity to Greatly Advance The Ethical And Non-Discriminatory Use Of AI In Financial Services And Should Take It
On October 30, 2023, the White House issued Executive Order 14110 entitled the Safe, Secure and Trustworthy Development and Use of Artificial Intelligence. The Executive Order (EO) is sweeping in its call for the executive branch and independent federal agencies to work on fostering the use of ethical artificial intelligence (AI). One of the purposes of the EO is to ensure that the use of AI is consistent with the “administration’s dedication to advancing equity and civil rights.” Section 2(d).
Given how rapidly AI is advancing, the CFPB should act expeditiously. The CFPB has demonstrated its commitment to proceed at a deliberate pace, but the market is impatient. Financial institutions are deploying generative AI for other purposes, but uncertainty remains about addressing longstanding concerns about digital redlining and black boxes. The very limited guidance the CFPB has issued over the last three years since it sought comments on the ethical use of AI to combat discrimination has not materially advanced equity, nor has it clarified what constitutes effective disparate impact monitoring for consumers or the financial services sector. If it has had any impact, the CFPB has not commented publicly. The agency should act soon to take substantive steps to correct this oversight by issuing written guidance to address technologies and standards for oversight of fairness or, at a minimum, providing examples in supervisory highlights and fair lending reports of compliant standards and oversight techniques it has observed in the marketplace.
