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ARTICLE · 28 OCTOBER 2024

Artificial Intelligence In Consumer Lending: Addressing AI-Related Risks

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Over the last several decades, banks have increasingly used algorithms to assist with underwriting consumer loans. Incorporating more data than ever before, AI has further enhanced the efficiency...

United StatesConsumer Protection
Katten Muchin Rosenman LLP
Katten Muchin Rosenman LLP
Nicholas Gervasi
Nicholas Gervasi
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In this article, the authors discuss the increasing role of artificial intelligence (AI) in consumer lending (focusing on the risks it presents), assess how the Consumer Finance Protection Bureau has approached these risks compared to other federal agencies, and provide recommendations for banks that use AI in consumer lending on reducing the risks associated with AI.

Over the last several decades, banks have increasingly used algorithms to assist with underwriting consumer loans.1 Incorporating more data than ever before, AI has further enhanced the efficiency, speed, and personalization at which loans are made.2 The influx of AI has led consumer groups to express concerns with the Consumer Finance Protection Bureau (CFPB) on necessary protections for consumers. Commentators have noted that AI can pose risks, such as lack of transparency and explainability, unintended outcomes, and biases introduced from incomplete or historical data. Thus far, the CFPB has, among

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