CFPB Issues New Guidance Requiring AI Credit Decision Explainability

CFPB issued guidance on lenders using AI for credit decisions
Lenders must provide specific reasons for adverse actions, not just checklist items
Growth of AI algorithms requires explainability even if models are complex
Lenders can't just say "purchasing history", must explain specific negative behaviors
CFPB treating fair lending and AI explainability as priority, issued other guidance on this

consumerfinance.gov

Relevant topic timeline:

9/25/2023

CFPB Cautions Lenders Against Using AI to Skirt Credit Denial Explanations

The Consumer Financial Protection Bureau (CFPB) has warned that artificial intelligence (AI) cannot be used by creditors as an exemption to deny consumers credit without providing specific reasons, as regulators grapple with the intersection of AI and regulation. The CFPB issued new guidance on the use of AI and other modeling in credit decisions, emphasizing the need for transparency and protection against discrimination.