CFPB Risks Defanging Fair Lending Enforcement as AI Use Grows

The Consumer Financial Protection Bureau’s proposal to eliminate statistical analyses targeting unintentional bias will likely exacerbate discrimination, especially as banks and other lenders ramp up their use of artificial intelligence in credit decisions, consumer and privacy groups said.

The CFPB in November proposed ending the use of disparate impact to enforce the 1974 Equal Credit Opportunity Act, in a dramatic rewrite of fair lending enforcement that could also hamper litigation from state attorneys general and private litigants.

Because AI algorithms are closely guarded trade secrets, using a statistical analysis of lending outcomes may be the only way to determine if ...