CFPB Circular 2022-03: Adverse Action Notification Requirements for Algorithmic Credit Decisions
Confirms that creditors must give specific reasons for adverse credit decisions even when a complex algorithm produced them. Model opacity is not a defence under ECOA.
Key dates
- May 26, 2022Circular issued
Risk areas addressed
Who it applies to
Creditors using algorithmic or machine-learning models to make credit decisions about US consumers.
Penalties & enforcement
ECOA and Regulation B liability, including civil penalties and restitution.
Enforced by: Consumer Financial Protection Bureau
CFPB Circular 2022-03 is enforced by Consumer Financial Protection Bureau. Its obligations are already live, so a gap is a present exposure rather than a future one. In practice that means knowing which of your AI systems fall in scope in financial services, holding assessments that speak to transparency, bias & discrimination and liability & redress, and being able to produce that evidence on request.