Source: Consumer Financial Protection Bureau

Consumer Financial Protection Bureau (CFPB) issued official guidance addressing the use of artificial intelligence by lenders in credit denial decisions. The guidance aims to ensure that AI-driven credit evaluation processes comply with fair lending laws and avoid discriminatory impacts on protected classes. The document outlines expectations for transparency, accuracy, and accountability in AI models used by financial institutions.

The CFPB emphasizes the importance of rigorous testing and monitoring to detect and mitigate bias in automated decision-making. The guidance encourages lenders to maintain clear documentation and provide consumers with understandable explanations when AI affects credit outcomes. The Bureau also signals its intention to increase oversight of AI applications in financial services to protect consumers. This regulatory step reflects growing concerns about fairness and ethics in AI-driven lending.