CFPB warns lenders on use of AI in credit denial process
By 
Jeff Dale2023-09-20T18:57:00
The Consumer Financial Protection Bureau (CFPB) warned lenders using artificial intelligence (AI) in credit denials that consumers must receive accurate and specific reasoning—and not checklists—for why a credit request was denied.
In a press release Tuesday, the agency said, “[C]reditors cannot simply use CFPB sample adverse action forms and checklists if they do not reflect the actual reason for the denial of credit or a change of credit conditions.”
In June, the Federal Reserve Bank of New York released its quarterly credit analysis survey. The survey found the overall rejection rate for credit applicants increased to 21.8 percent, the highest level since June 2018.
Related articles
-
News BriefCFPB proposes expanded oversight of nonbank companies
The Consumer Financial Protection Bureau is seeking greater authority to supervise the activities of companies that offer services like digital wallets and payment apps on par with how the agency oversees large banks, credit unions, and other financial institutions.
-
PremiumCFPB to beef up enforcement staff to police ‘surveillance economy’
Eric Halperin, enforcement director at the Consumer Financial Protection Bureau, said his office will be adding 75 new full-time employees as part of an expansion of its efforts to protect consumers from misuse of their personal data.
-
News BriefTransUnion settles with CFPB, FTC over tenant screening accuracy
Credit reporting agency TransUnion agreed to pay $23 million total across settlements with the Consumer Financial Protection Bureau and Federal Trade Commission for alleged tenant screening and security freeze deficiencies.
More from Risk Management
-
News BriefCOSO’s draft corporate governance framework provides roadmap to compliant business practices
Corporate governance is, all too often, handed down from generation to generation. Like a well-worn jacket, it works great—until it doesn’t. Typically, it is a crisis that forces companies to reassess their corporate governance framework, as gaps are filled and poor policies rewritten. But it doesn’t have to be that ...
-
News BriefInvestment scammers, other fraudsters scored billions from consumers in 2024, FTC reports
The public reported a 25 percent increase in losses–totaling more than $12.5 billion in 2024–to investment scams, tech rip-offs, and general fraud, according to an analysis by the Federal Trade Commission.
-
News BriefPortuguese bank ousts chief risk officer after ‘suspicious’ transactions uncovered
Portuguese bank Novo Banco, S.A., fired Chief Risk Officer Carlos Jorge Ferreira Brandão “with just cause” after an internal probe discovered “suspicious financial transactions” in his sphere.