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Federal agencies reaffirm commitment to confront AI-based discrimination
On April 25, the CFPB, DOJ, FTC, and Equal Employment Opportunity Commission released a joint statement reaffirming their commitment to protect the public from bias in automated systems and artificial intelligence (AI). “America’s commitment to the core principles of fairness, equality, and justice are deeply embedded in the federal laws that our agencies enforce to protect civil rights, fair competition, consumer protection, and equal opportunity,” the agencies said, emphasizing that existing authorities apply equally to the use of new technologies and responsible innovation as they do to any other conduct. The agencies have previously expressed concerns about potentially harmful AI applications, including black box algorithms, algorithmic marketing and advertising, abusive AI technology usage, digital redlining, and repeat offenders’ use of AI, which may contribute to unlawful discrimination, biases, and violate consumers’ rights.
“We already see how AI tools can turbocharge fraud and automate discrimination, and we won’t hesitate to use the full scope of our legal authorities to protect Americans from these threats,” FTC Chair Lina M. Khan said. “Technological advances can deliver critical innovation—but claims of innovation must not be cover for lawbreaking. There is no AI exemption to the laws on the books, and the FTC will vigorously enforce the law to combat unfair or deceptive practices or unfair methods of competition,” Khan added.
CFPB Director Rohit Chopra echoed Khan’s sentiments and said the Bureau, along with other agencies, are taking measures to address unchecked AI. “While machines crunching numbers might seem capable of taking human bias out of the equation, that’s not what is happening,” Chopra said. “When consumers and regulators do not know how decisions are made by artificial intelligence, consumers are unable to participate in a fair and competitive market free from bias,” Chopra added. The Director’s statements concluded by noting that the Bureau will continue to collaborate with other agencies to enforce federal consumer financial protection laws, regardless of whether the violations occur through traditional means or advanced technologies.
Additionally, Assistant Attorney General Kristen Clarke of the DOJ’s Civil Rights Division noted that “[a]s social media platforms, banks, landlords, employers and other businesses [] choose to rely on artificial intelligence, algorithms and other data tools to automate decision-making and to conduct business, we stand ready to hold accountable those entities that fail to address the discriminatory outcomes that too often result.”
Treasury highlights strategy to advance racial equity
On October 25, the U.S. Treasury Department released a blog post that highlights how the Department is focusing on advancing racial equity. Among other things, the blog noted that this focus has informed the Treasury’s decision to establish “a dedicated Office of Recovery Programs and has flowed through the policy and operational decisions [it has] made to implement the historic American Rescue Plan.” According to the blog, the Office of Recovery Programs addresses urgent needs and makes lasting investments to mitigate long-term disparities by making equity a foundational priority in the delivery of the program, which has improved the circumstances of vulnerable households and created opportunities for small businesses, cities, and states. In addition, Treasury announced the appointment of Janis Bowdler to be the Department’s first Counselor for Racial Equity. The blog also noted that Treasury’s “efforts go beyond [Treasury’s] diverse, dedicated political appointees,” because Treasury is “also deeply committed to improving diversity and inclusion among the broader career Treasury workforce, where we acknowledge much more work remains to be done.”
Acting comptroller discusses bias in appraisals
On June 15, OCC acting Comptroller Michael J. Hsu delivered remarks during the CFPB’s Virtual Home Appraisal Bias Event to raise awareness on the importance of reducing bias in real estate appraisals. The event included discussions with civil rights organizations, housing policy experts, and other federal agencies on how bias can occur in real estate appraisals and automated valuation models. Biased appraisals, Hsu noted, have a large impact on lending and contribute to inequity in housing values. He pointed to data from studies showing that homes in Black neighborhoods are valued at approximately half the price as homes in neighborhoods with few or no Black residents. This difference has created a $156 billion cumulative loss in value across the country for majority-Black neighborhoods, Hsu stated. He further emphasized that “[w]hile appraisers and the appraisal process are not often seen as parts of the banking system, there are clear intersections. Banking regulations require appraisals on certain transactions, and banks rely on third-party appraisals in their underwriting and overall risk management practices. Regulators, including the OCC, expect banks to ensure their vendors treat customers fairly and do not discriminate, and we are seeing banks held accountable for discrimination in appraisals they use.” Hsu added that holding banks accountable, while necessary, is not enough to solve the problem of biased appraisals, and that a solution will require collaboration between all stakeholders, including the attendees participating in the Bureau’s event.