CFPB Issue Spotlight Addresses Concerns About Bank Use of AI Chatbots

CFPB Issue Spotlight Addresses Concerns About Bank Use of AI Chatbots

The Consumer Financial Protection Bureau (CFPB) has released a new issue spotlight focusing on AI chatbots in the banking industry. According to the agency, chatbots may pose significant challenges for consumers and potential legal compliance concerns for banks.

Bank use of AI chatbots on the rise

The CFPB’s research found that commercial banking’s implementation of AI chatbots for customer service is growing. In fact, the agency said that all 10 of the biggest commercial banks now employ chatbots for customer service. More than a third of U.S. bank customers reportedly received services from chatbots in 2022.

In addition, banks are apparently turning to even more sophisticated chatbots. Many of the financial institutions initially adopted simple “rules based” chat programs to aid with customer service. They are now beginning to utilize chatbots that rely on artificial intelligence. As a result, CFBP’s concerns about the impact on consumers are also increasing.

The risks for consumers

As the CFPB notes in its report, there are several areas of concern posed by AI chatbot adoption. These include:

Technical limitations. Because this technology is still in its infancy, chatbots can struggle with complex problems. The CFPB cited wasted time, increased levels of frustration, and the potential for erroneous responses as challenges for consumers. In addition, inaccurate information could potentially leave consumers paying “junk fees” that they might otherwise be able to avoid.

Loss of trust. If consumers are unable to receive the support they need, they may lose trust in their financial service providers.

Privacy and security concerns. Like other automated technologies, AI chatbots may pose security and privacy risks for consumers. Criminals can create their own chatbots to impersonate these programs, tricking customers into providing sensitive data.

Compliance concerns. The CFPB noted that deficient chatbot technology may put financial institutions at risk of noncompliance with federal law.

In its conclusion, the report noted that it will continue to watch the industry’ use of AI chatbots. “The shift away from relationship banking and toward algorithmic banking will have a number of long-term implications that the CFPB will continue to monitor closely.”

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