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CR details safeguards needed to ensure consumers are protected from risks
WASHINGTON – In a comment letter submitted to the Treasury Department, Consumer Reports highlighted some of the potential benefits that artificial intelligence used by financial institutions can provide to consumers, but also warned of the potential risks the technology can pose depending on how it is deployed. CR’s letter is in response to a request for information by the Department and details a number of safeguards policymakers should ensure that institutions adopt in order for consumers to enjoy the benefits of AI while mitigating the risks.
CR’s letter points out that there are a number of ways financial institutions are using AI, ranging from powering digital chatbots and virtual assistants, to augmenting or even automating credit underwriting, to digital marketing and fraud monitoring. AI and machine learning (ML) offers many potential benefits for consumers, including increasing access to credit for traditionally underserved consumers with limited credit histories, expanding the availability of new and innovative products potentially at lower cost, and providing faster customer service.
“Recent advances in AI and machine learning are game changing for both industry and consumers, but these new technologies are a double-edged sword,” said Jennifer Chien, senior policy counsel for Consumer Reports. “AI can be used by banks and other financial institutions to improve customer service and expand access to credit, but it can also reinforce bias and be used to target vulnerable consumers with predatory products.”
Chien continued, “We need clear and strong safeguards to mitigate the risks posed by artificial intelligence so it is used in a safe and responsible manner and consumers can reap the benefits and avoid the harm these advanced technologies can cause.”
AI/ML models can be used to increase access to finance but it can also perpetuate and exacerbate bias against some consumers. Digital targeted marketing can be used to expand access to services, but also for aggressive marketing of predatory products to vulnerable consumers that exploits behavioral biases. GenAI may allow for quicker responses to customer service queries, but may also result in inaccurate responses or prevent consumers from reaching live agents to resolve urgent matters.
CR’s letter to the Treasury Department details a number of policy recommendations for regulators to ensure the safe and responsible use of AI/ML:
For a more detailed explanation of some of the risks of AI/ML and the safeguards needed to mitigate them, see CR’s letter to the Treasury Department.
Michael McCauley, michael.mccauley@consumer.org
Consumer Reports is an independent, nonprofit member organization that works side by side with consumers for truth, transparency, and fairness in the marketplace.
