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The CFPB, Department of Justice, Equal Employment Opportunity Commission, and Federal Trade Commission issued a joint statement noting that automated systems, such as artificial intelligence (AI), can unlawfully discriminate and lead to a violation of federal law.

This joint statement reflects previous guidance issued by the CFPB in the context of compliance with federal consumer financial law. It also signals increased supervisory interest from other federal agencies regarding AI and discrimination. Of note, the CFPB issued a circular in May 2022 addressing how “complex algorithms” can discriminate in credit applications. 

The statement explains that automated systems can be skewed based on the input data, which causes a lack of transparency that “makes it all the more difficult for developers, businesses, and individuals to know whether an automated system is fair.” Additionally, the agencies remarked that developers do not always account for how their system will be used and that they can still violate federal law, especially anti-discrimination legislation. The statement also emphasizes that the agencies have the authority to monitor the use of automated systems and “promote responsible innovation.”

NAFCU previously wrote to the NCUA, CFPB, and Federal Reserve regarding financial institutions’ use of AI and machine learning (ML). In the letter, the association noted that “[c]redit unions are committed to pursuing responsible innovation, but to meaningfully pursue AI and ML technologies requires a supervisory approach that does not add to already high examination burden.” NAFCU will continue to engage regulators to ensure responsible innovation that does not increase regulatory burden.