United States of America: Issued CFPB Guidance on credit denials by lenders using artificial intelligence

On 19 September 2023, the US Consumer Financial Protection Bureau (CFPB) issued its guidance on credit denials by lenders using artificial intelligence (AI). The guidance emphasises that lenders must provide accurate and specific reasons when taking adverse actions against consumers, such as denying credit. This requirement is crucial in light of the increasing use of advanced algorithms and consumer data in credit assessments. The guidance stresses that even when using AI, creditors must offer precise explanations for their actions, rather than using broad categories.