AI in Financial Services—Consumer Protection Challenges in the Age of Artificial Intelligence

In today's episode of the award-winning Consumer Finance Monitor Podcast, our host, Alan Kaplinsky (founder, chair for 25 years and now Senior Counsel of the Consumer Financial Services Group at Ballard Spahr LLP) is joined by Delicia Hand, a nationally recognized expert on digital civil rights, AI governance, and consumer protection who leads AI policy initiatives at Consumer Reports. The discussion centers on Consumer Reports' recently released report, AI and Consumer Finance: A Landscape Analysis of Market Forces, Evaluation Frameworks, and Regulatory Gaps, and examines how AI is reshaping consumer finance while exposing important gaps in existing regulatory frameworks. Key topics discussed are: ·        Why approximately 75% of consumers express concern that AI could result in bias or unfair treatment in financial services, while only 8% believe current laws adequately protect them. ·        Whether the rapid adoption of AI is being driven more by competitive pressures than by demonstrated consumer benefits. ·        Consumer Reports' proposed framework for evaluating AI systems used in financial services, including twelve key dimensions designed to assess whether AI systems adequately protect consumers. ·        The growing use of AI in credit underwriting and lending, including both its potential to expand access to credit and its potential to perpetuate existing biases. ·        The increasing use of algorithmic and personalized pricing and the consumer protection concerns raised by AI-driven pricing models. ·        The risks associated with consumers relying on general-purpose AI systems as financial advisors despite the absence of traditional fiduciary obligations or regulatory oversight. ·        Privacy concerns arising from AI systems that access consumers' financial account information through data aggregation services. <span sty