CFPB Issues Additional Guidance on Use of AI in Credit Underwriting

On September 19, the Consumer Financial Protection Bureau (CFPB) issued Circular 2023-03, which provides guidance as to how lenders must explain denials of applications of credit when the underwriting is based on artificial intelligence (AI) or complex credit models. The upshot of the guidance is that a lender that denies an application for credit based on AI or similar predictive decision-making technologies may not rely on the use of a standard “checkbox” adverse action notice form, if the use…
By: Bradley Arant Boult Cummings LLP