On June 6 2023, the Consumer Financial Protection Bureau (CFPB) issued a report analyzing the use of chatbots in consumer finance and the impact on customer service. The report notes that financial institutions are increasingly using chatbots to reduce the costs of human customer service agents, and moving away from simple, rules-based chatbots toward more sophisticated technologies, such as large language models and generative chatbots and others marketed as artificial intelligence (AI).
The report found that while chatbots may be useful for answering basic questions, their effectiveness lessens as the questions become more complex. According to the CFPB, “[r]eview of consumer complaints and of the current market show that some people experience significant negative outcomes due to the technical limitations of chatbots functionality.” Additionally, the CFPB warns that financial institutions may risk violating federal consumer protection law when deploying chatbot technology. In addition to potential privacy and security risks, the CFPB states that “[w]hen chatbots are poorly designed, or when customers are unable to get support, there can be widespread harm and customer trust can be significantly undermined.”
Chatbots are computer programs that mimic human interaction by processing a user’s input to produce an appropriate output. “Rule-based chatbots use either decision tree logic or a database of keywords to trigger preset, limited responses. These chatbots may present the user with a set menu of options to select from or navigate the user between options based on a set of keywords and generate replies using predetermined rules … More complex chatbots use additional technologies to generate responses. Specifically, these chatbots may be designed to use machine learning or technology often marketed as ‘artificial intelligence’ to simulate natural dialogue.” Chatbots have been widely adopted by banks, mortgage servicers, and debt collectors. In 2022, over 98 million consumers interacted with a bank’s chatbot and that number is projected to grow to 110.9 million users by 2026.
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