Revealing the Blind Spots: A Critical Review of the CFPB’s Issue Spotlight on Chatbots in Consumer Finance

As the evolution of Artificial Intelligence (“AI”) dominates headlines throughout the globe, financial institutions have been paying attention. Not surprisingly, so has the Consumer Financial Protection Bureau (“CFPB” or “Bureau”).  Just as financial sector companies feverishly ramp up their use of AI to complete, augment, and personalize customer service interactions, the CFPB is pumping the proverbial brakes.

On June 6, the Bureau published an Issue Spotlight (“Spotlight”) titled “Chatbots in Consumer Finance,” cautioning against the industry’s reliance on advanced chatbots, saying it can lead to violations of consumer finance laws, harm consumers by providing inaccurate information and diminish customer service. The Spotlight indicates that automated chatbots, especially those fueled by AI and related technology, will be a new area of focus for the CFPB, in terms of both supervision and enforcement.

The underlying technologies used in these customer-facing chatbots include large language models, AI, generative machine learning, neural networks, and natural language processing (NLP). These technologies enable chatbots to simulate human-like responses and automatically generate chat responses using text and voice.