June 15, 2019

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Democratic Senators Seek Information About Discrimination by Lenders Using Algorithms

Democratic Senators Elizabeth Warren and Doug Jones have sent a letter to the CFPB, Federal Reserve, OCC, and FDIC expressing concern that fintech and traditional lenders using algorithms in their underwriting processes are engaging in unlawful discrimination.  (Such algorithms are often referred to as “artificial intelligence.”)

In their letter, the Senators reference research results showing that “the algorithms used by FinTech lenders are as discriminatory as loan officers.”  They state that “the federal government will have to take action to ensure that antidiscrimination laws keep up with innovation.”

The Senators request answers by June 24 to a series of questions, including what the agencies are doing “to identify and combat lending discrimination by lenders who use algorithms for underwriting” and what analyses the agencies have conducted or plan to conduct regarding “the impact of FinTech companies or use of FinTech algorithms on minority borrowers, including differences in credit availability and pricing.”

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About this Author

Barbara S. Mishkin, Ballard Spahr, Philadelphia, Deceptive Practices Lawyer, Fair Debt Collection Practices Act, Gramm Leach Bliley
Of Counsel

Barbara Mishkin focuses on consumer compliance and banking law. The federal laws with which Ms. Mishkin has dealt extensively include the Truth in Lending Act, Equal Credit Opportunity Act, Real Estate Settlement Procedures Act, Fair Credit Reporting Act, Fair Debt Collection Practices Act, and Gramm-Leach-Bliley Act. She also has significant experience with state usury and lender licensing laws, as well as state laws prohibiting unfair and deceptive acts and practices.

American Bar Association, member, Consumer Financial Services Committee;...

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