CFPB Prioritizes Fair Lending, Machine Learning, Privacy In Digital Engagement

Members of the auto finance industry continue to have a strong appetite for developing their digital origination and servicing platforms. Much of the industry also has a desire to use data in novel and creative ways to facilitate customer access to credit. 

However, the desire for growth and innovation can be tempered by regulatory oversight. Here, we discuss the resurgence in regulatory focus on disparate impact, this time applied to machine learning and agency data that reveals the vast use of digital platforms across most borrower segments, coupled with updated expectations for data security and identity verification.

Protected classes and disparate impact: A refresher

The Consumer Financial Protection Bureau (CFPB) has consistently stated that fair lending and credit discrimination will be a priority for the agency. Federal laws like the Equal Credit Opportunity Act (ECOA) prohibit a creditor from discriminating against any applicant based on race,