CFPB Rules Expected Soon on Chatbots

The Biden administration announced this week that it expects to release guidance in the future regarding the use of chatbots on company websites. As part of the “Time is Money” initiative to improve and streamline consumer services experiences, the administration has directed the Consumer Financial Protection Bureau (CFPB) to issue rules to prevent the use of chatbots by financial institutions that may be “ineffective and time wasting.” Among such rules, it is expected that the CFPB may require institutions to notify consumers when the chat function is run by a live-person as opposed to a bot.     

There is growing attention to the use of chatbots, particularly at the state level, where companies are facing litigation for allegedly not properly notifying customers about the types of personal data that these chatbots collect, including how this data may be used by third parties. These lawsuits are citing laws (e.g. California Invasion of Privacy Act) that allege such collection of information by a chatbot is the equivalent of a wiretap.

Paul Hastings will continue to monitor and send alerts on the initiative, particularly when the CFPB issues their ruling. To ensure you are notified, subscribe to the PH Privacy blog here.