Artificial Intelligence is revolutionizing industries, including credit and collections, but contrary to popular opinion, it’s far from unregulated. Ellen Rosenblum, who just retired as the attorney general of Oregon, issued guidance in late December clarifying that existing consumer protection, privacy, and anti-discrimination laws apply to AI, potentially reshaping how companies deploy this transformative technology. It’s likely that other states will follow suit with their own guidance or regulations as AI usage becomes more popular.
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Driving the news: The guidance was intended to illustrate how existing state laws intersect with AI use. While the guidance acknowledges AI’s potential to enhance efficiency and personalization, it also highlights risks like privacy violations, bias, and transparency gaps.
- Oregon’s Unlawful Trade Practices Act (UTPA) prohibits misrepresentation in consumer transactions, extending to AI applications like chatbots and automated pricing. For example, misrepresenting a chatbot as human or using AI to inflate discounts could result in liability.
- The Consumer Privacy Act mandates explicit consent for sensitive data use, transparency about AI-driven profiling, and mechanisms for consumers to opt out or revoke consent.
- Under the Equality Act, AI systems that reinforce bias or deny services based on protected characteristics — such as discriminatory loan approvals — are subject to anti-discrimination enforcement.
Zoom out: These laws signal increasing scrutiny on AI practices, even as the technology accelerates. Oregon is joining states like California and Illinois in adapting existing laws to cover AI, while federal efforts lag.
Between the lines: For the credit and collection industry, this guidance underscores the need for robust compliance practices. Key takeaways include:
- Audit your AI tools: Ensure transparency and document how algorithms make decisions, especially in credit reporting or consumer outreach.
- Data practices matter: Protect consumer data and secure explicit consent when using it to train models. Failing to do so could violate both privacy laws and public trust.
- Address bias: Regularly evaluate AI outputs to identify and correct potential discriminatory patterns.
What’s next: The Oregon Legislature may introduce AI-specific bills in 2025. In the meantime, companies deploying AI should act proactively to align their operations with existing regulations. This includes conducting data protection assessments and ensuring fair, accountable, and transparent AI practices.
The bottom line: AI is no longer operating in a legal gray area. For companies in debt collection and beyond, embracing ethical AI use is not just a compliance necessity — it’s a competitive advantage.
