CFPB warnings of bias in AI could spook lenders

Rohit Chopra has seized on nearly every public opportunity as director of the Consumer Financial Protection Bureau to admonish companies about the potential misuse of artificial intelligence in lending decisions. Chopra has said that algorithms can never "be free of bias" and may result in credit determinations that are unfair to consumers. He claims machine learning can be anti-competitive and could lead to "digital redlining" and "robo discrimination." The message for banks and fast-moving fintechs is loud and clear: Enforcement actions related to the use of AI are coming, as is potential guidance tied to what makes alternative data such as utility and rent payments risky when used in marketing, pricing and underwriting products, experts say. "The focus on artificial intelligence and machine learning is explicit," said Stephen Hayes, a partner at Relman Colfax PLLC and a former CFPB senior counsel.