Financial regulators are taking steps to ensure companies follow the law when using AI systems like ChatGPT amid growing concerns about their potential risks.
Automated systems and algorithms already play a significant role in determining credit ratings, loan terms, bank fees, and other financial aspects.Â
AI also influences hiring practices, housing decisions, and working conditions.
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Federal agencies recently issued a joint statement on enforcement, emphasizing using AI to make decisions does not exempt companies from responsibility for the impacts of those decisions.
The Consumer Financial Protection Bureau (CFPB) has already imposed fines on banks that mismanaged automated systems.
Flawed algorithms and new technologies have led to wrongful home foreclosures, car repossessions, and lost benefit payments.
Regulators stress there will be no “AI exemptions” regarding consumer protection.
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The CFPB, the Federal Trade Commission, the Equal Employment Opportunity Commission, and the Department of Justice are allocating resources and personnel to address the potential adverse effects of new technologies on consumers’ lives.
Regulators say companies must understand how their AI systems make decisions, and when AI-driven decisions lack transparency, those algorithms should not be used.
The Fair Credit Reporting Act and Equal Credit Opportunity Act require financial providers to explain any adverse credit decisions, which extends to decisions related to housing and employment.
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To mitigate risks associated with powerful AI systems, experts suggest establishing standards and forming regulatory agencies to license and oversee the technology.
While comprehensive AI regulations have yet to emerge in the US, societal concerns have prompted discussions between tech CEOs and policymakers regarding the implications of these tools.
Critics argue agencies should conduct further studies and publish information about AI markets, industry practices, major players, and data usage, similar to how regulators have done with new consumer finance products and technologies in the past.
Publishing such information would enhance transparency and understanding in the rapidly evolving AI ecosystem.
