What are the penalties for non-compliance with the CFPB AI Credit Guidance?

Civil money penalties up to $1M per day for knowing violations; private right of action under ECOA

When does the CFPB AI Credit Guidance take effect?

The CFPB Guidance on AI in Credit Decisioning took effect on May 26, 2022.

CFPB AI Credit Guidance: What Small Teams Need to Know

CFPB Guidance on AI in Credit Decisioning

The Consumer Financial Protection Bureau (CFPB) has issued guidance clarifying that lenders must provide specific, accurate reasons when taking adverse action (denial, unfavorable terms) in credit decisions — even when the decision was made by an AI or machine learning model. 'The model said no' is not a legally sufficient adverse action notice under ECOA and Regulation B.

What this means for your team

If your product uses AI to make or assist in credit decisions — loan underwriting, credit line setting, insurance pricing, rental screening — you must be able to explain, specifically and accurately, the factors that led to each adverse decision. AI models that cannot produce interpretable reasons for their outputs are non-compliant. The CFPB has explicitly rejected 'checklist' adverse action reasons that do not reflect the actual model factors. This pushes lenders toward explainable AI or hybrid systems that combine model scoring with auditable factor attribution.

Key requirements

Adverse action notices must cite specific, principal reasons for the credit decision

'The model said no' or generic checklist reasons are insufficient under Regulation B

AI models must be capable of producing factors that actually drove the specific decision

Fair lending laws (ECOA, FCRA, UDAP) apply fully to AI-assisted credit decisions

CFPB has signaled it will scrutinize AI-based credit models for disparate impact

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CFPB Guidance on AI in Credit Decisioning

What this means for your team

Key requirements

Adverse action notices must cite specific, principal reasons for the credit decision

'The model said no' or generic checklist reasons are insufficient under Regulation B

AI models must be capable of producing factors that actually drove the specific decision

Fair lending laws (ECOA, FCRA, UDAP) apply fully to AI-assisted credit decisions

CFPB has signaled it will scrutinize AI-based credit models for disparate impact

CFPB Guidance on AI in Credit Decisioning

What this means for your team

Key requirements

Key terms

Further reading

CFPB Guidance on AI in Credit Decisioning

What this means for your team

Key requirements

Key terms

Further reading