FTC pursues AI regulation, bans biased algorithms

As AI makes dramatic inroads in enterprises, the U.S. government has quietly started to regulate the use of AI in the consumer credit industry and other areas by banning the use of biased and unexplainable algorithms in decisions that affect consumers. In recent years, the Federal Trade Commission has tried to regulate AI in lending with laws that are already in place, chief among them the Fair Credit Reporting Act (FCRA). The federal agency has also included AI regulation under the FTC Act and the Equal Credit Opportunity Act (ECOA). While the federal laws don't contain explicit language regulating AI, the FTC, which enforces the laws, has issued guidance over the last two years stipulating that under the FCRA, lenders can't use biased or unexplainable algorithms for not only consumer credit, but also employment, housing, insurance and other benefits. The FTC has also clarified that the sale or use of racially biased algorithms, for example, is a deceptive practice banned by the FTC Act.