McGlinchey in the News
CFPB tees up investigations of AI-based underwriting, adverse action noticesRead Time: 1 min
Of Counsel Brian Fink (Washington, DC) is quoted in “CFPB tees up investigations of AI-based underwriting, adverse action notices” in Auto Finance News. Brian is a former regulator in the CFPB’s Office of Supervision Policy. The article covers CFPB’s attitudes towards AI and approach to enforcing related federal laws.
Fair lending and the use of technology has been one of the Bureau’s top priorities since Rohit Chopra took over as director of the CFPB in 2021, Brian Fink, an attorney at McGlinchey, said.
“Director Chopra mentioned in his [Senate] confirmation testimony that AI algorithms, machine learning and fair lending are priorities, and I think this is twofor,” Fink said. “This nominally addresses the fair lending issue. I think they took the opportunity to essentially throw a bunch of sand in the gears of folks who are using machine learning. It puts the brakes on it, in some way.”
Champions of AI and ML-based underwriting frequently argue that the technology enables access to credit for a segment of consumer that wouldn’t otherwise qualify under traditional, FICO score-based systems. And while that may be true, the Bureau is likely concerned that the proliferation of these new technologies and their ability to learn “creates risks that no one understands,” Fink said.
“That’s the concern from a fair lending perspective — these tools that could broaden the pie…maybe they only do for some groups,” Fink said. “And that’s problematic. I think that’s what they’re doing with this adverse action circular is trying to make companies who use this tech pause and evaluate what the impacts are and the causes of their decisioning and if they understand them fully.”
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