The bureau warns of risks with noncompliance of federal consumer financial protection laws and provides guidance on how to best use chatbots when communicating with consumers.
06/07/2023 1:10 P.M.
4 minute read
The Consumer Financial Protection Bureau (CFPB) released an issue spotlight Tuesday analyzing financial institutions’ widespread use of chatbots.
Numerous complaints from dissatisfied consumers who attempted to get prompt, transparent responses from their financial institutions or to voice a concern or dispute have been sent to the CFPB, according to the report.
“To reduce costs, many financial institutions are integrating artificial intelligence technologies to steer people toward chatbots,” said CFPB Director Rohit Chopra. “A poorly deployed chatbot can lead to customer frustration, reduced trust, and even violations of the law.”
Here are some key findings from the report:
- Financial institutions are increasingly using chatbots as a cost-effective alternative to human customer service.
- Chatbots may be useful for resolving basic inquiries, but their effectiveness wanes as problems become more complex.
- Financial institutions risk violating legal obligations, eroding customer trust and causing consumer harm when deploying chatbot technology.
In 2022, it was estimated that 37% of Americans engaged with a bank’s chatbot, and this percentage is expected to rise. The top 10 commercial banks in the nation all engage consumers with chatbots of different complexity. Financial firms claim that their chatbots let customers pay invoices, search recent transaction and retrieve account balances, among other functions.
A large portion of the financial sector relies on straightforward rule-based chatbots using either decision tree logic or databases of keywords or emojis that send users to frequently asked questions (FAQs) or trigger pre-set, limited responses, according to the CFPB.
Other businesses, like Capital One’s Eno and Bank of America’s Erica, have created their own chatbots by using real customer discussions and chat logs to train the algorithms in order to satisfy customer service demands.
When it is reasonably obvious that the chatbot cannot meet the needs of the consumer, the bureau recommends that financial institutions should refrain from adopting chatbots as their main method of customer service delivery.
The spotlight found the use of chatbots raised several risks, including:
- Noncompliance with federal consumer financial protection laws;
- Diminished customer service and trust; and
- Harm to consumers.
According to the spotlight, market participants should use new technology when they have the opportunity to do so in a fashion that complies with the law and, preferably, improves customer service.
Comments on AI Processes
Meanwhile, the Biden-Harris administration is working on new programs “that will advance the research, development, and deployment of responsible artificial intelligence (AI) that protects individuals’ rights and safety and delivers results for the American people,” according to an announcement from the White House.
In April, several federal agencies released a policy statement on the use of artificial intelligence products under existing laws, particularly to ensure that consumers aren’t discriminated against by the algorithms companies use for loans or other financial products, ACA International previously reported.
In addition to the CFPB, the Federal Trade Commission, Department of Justice Civil Rights Division and Equal Employment Opportunity Commission participated in the interagency statement (PDF).
ACA is working on a response to the White House’s RFI and seeks member feedback to inform its comments on how AI is used in the accounts receivable management industry, ACA previously reported. Email any feedback to [email protected] and stay tuned for information on a webinar for members to seek additional input.
Comments on the White House’s RFI are due by 5 p.m. EST, July 7, 2023.
Members interested in filing their own comments on the federal government’s AI plans can do so through the Federal eRulemaking Portal at regulations.gov with Docket Number 2023-11346.
In a three-part ACA How education series, ChatGPT: Understanding ChatGPT & Large Language Modeling, beginning Thursday, June 15, Porter Morgan, partner at Martin Lyons Watts Morgan PLLC, will explain how to use ChatGPT in your office, including interactive demonstrations and participation in various prompts.
Register for the education series here.
AI and ChatGPT will also be a focus of sessions at ACA’s 2023 Convention & Expo, which has early-bird registration open through June 14.
Remember: ACA online education is included in the purchase of the All-Access Training Zone. If you’re already subscribed, this series is included in your Training Zone pass for you and your company. If not, invest in your employees by purchasing the Training Zone and access all of ACA’s seminars, seminar recordings and the ACA How tutorials.
Check ACA’s online events calendar for regular updates on our seminar schedule. Updates are also available by subscribing to events and education email notices through your My ACA profile at acainternational.org.