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"Ruling on anti-hacking law may guide fair lending tests" by Jeffrey P. Naimon and H Joshua Kotin (Law360)

Law360

Jeffrey P. Naimon, H Joshua Kotin

Regulators, consumer groups, academics and private litigants are grappling with the fair lending implications of the credit models powering the explosive growth in online lending by banks and financial technology firms.

The U.S. District Court for the District of Columbia in late March concluded that creating fake online profiles to test proprietary algorithms for discrimination does not violate the Computer Fraud and Abuse Act, or CFAA, even if the creation of such accounts violates the terms of service on the host's website.

The holding in Sandvig v. Barr may encourage some constituencies to update the old-school strategy of deploying human testers into the online credit arena. In addition, the U.S. Supreme Court is reviewing a case that may shed further light on whether a violation of terms of service implicates the notoriously vague CFAA, which was enacted in 1984 when floppy disks were cutting-edge technology.

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Originally published in Law360; reprinted with permission.

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