Using Artificial Intelligence and Algorithms

“The FTC’s law enforcement actions, studies, and guidance emphasize that the use of AI tools should be transparent, explainable, fair, and empirically sound, while fostering accountability. We believe that our experience, as well as existing laws, can offer important lessons about how companies can manage the consumer protection risks of AI and algorithms.”

BE TRANSPARENT:

  • Don’t deceive consumers about how you use automated tools
  • Be transparent when collecting sensitive data.
  • If you make automated decisions based on information from a third-party vendor, you may be required to provide the consumer with an “adverse action” notice.

EXPLAIN YOUR DECISION TO THE CONSUMER:

  • If you deny consumers something of value based on algorithmic decision-making, explain why
  • If you use algorithms to assign risk scores to consumers, also disclose the key factors that affected the score, rank ordered for importance
  • If you might change the terms of a deal based on automated tools, make sure to tell consumers.
  • ENSURE THAT YOUR DECISIONS ARE FAIR:
  • Don’t discriminate based on protected classes.
  • Focus on inputs, but also on outcomes.
  • Give consumers access and an opportunity to correct information used to make decisions about them.

ENSURE TAHT YOUR DATA AND MODELS ARE ROBUST AND EMPIRICALLY SOUND:

  • If you provide data about consumers to others to make decisions about consumer access to credit, employment, insurance, housing, government benefits, check-cashing or similar transactions, you may be a consumer reporting agency that must comply with the FCRA, including ensuring that the data is accurate and up to date
  • If you provide data about your customers to others for use in automated decision-making, you may have obligations to ensure that the data is accurate, even if you are not a consumer reporting agency.
  • Make sure that your AI models are validated and revalidated to ensure that they work as intended, and do not illegally discriminate.

HOLD YOURSELF ACCOUNTABLE FOR COMPLIANCE, ETHICS, FAIRNESS, AND NONDISCRIMINATION:

  • Ask questions before you use the algorithm.
  • Protect your algorithm from unauthorized use.
  • Consider your accountability mechanism.

More information, here

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