FTC and CFPB Emphasize the Importance of Building Tech Capacity
The FTC and CFPB released agency-specific action statements on increasing tech capacity, including actively hiring technologists, to "help enforce the laws on the book and design remedies that work for consumers, workers, small businesses, and others in the digital era."
In its technology blog, titled "Best Practices in Building Tech Capacity in Law Enforcement Agencies," the FTC's Office of Technology highlighted the increasing importance in using existing legal and technology tools in enforcement and in developing and implementing new or updated tools and approaches to strengthen investigations and agency missions. The FTC argued that increasing digitization of the economy necessitates strengthening the capacity and expertise of agencies in technology to better understand, intervene and regulate effectively. In order to ensure consumer protection and competitive markets, the FTC said it must enhance interdisciplinary and cross-agency collaboration, develop technical skills among staff and engage in international cooperation to address the complexities of digital and technology sectors. The FTC and other member agencies of the International Competition Network (ICN) jointly issued a statement about how regulatory agencies can increase their tech capacity to keep pace with the increasing use of technology across industries.
In a published statement on "Enhancing Agency Capabilities to Address Transformative Technologies," CFPB Director Rohit Chopra and Chief Technologist Erie Meyer recognized that market participants are quickly adopting new data-intensive business practices and that large technology conglomerates are increasingly entering a number of consumer finance markets. They said that CFPB is addressing transformative technologies by (i) embedding more technologists across the CFPB’s core functions, (ii) conducting research and analysis on the application of emerging technologies and (iii) advancing competitive marketplaces and assisting law abiding firms.
Commentary
These agency-specific action statements on tech capacity build upon earlier tech-focused regulatory initiatives and developments and further signal the importance of technology to both federal and state regulators. The CFPB previously highlighted its efforts to increase tech capacity, including actively hiring technologists, as part of a larger effort to regulate, supervise and enforce consumer financial services laws and regulations in the digital era. As the tech landscape – including AI – continues to innovate and evolve, the CFPB says that its staff technologists work in interdisciplinary teams across the Bureau to help identify "emerging technology developments, spot potential issues and where appropriate, help enforce the law and develop lasting remedies."
Tech-focused business practices are being developed and implemented across the consumer finance marketplace – from marketing and loan origination to credit reporting and collections — and Big Tech companies are increasingly offering a number of different consumer financial services and products. At the same time, the CFPB now has technologists actively engaged in supervisory examinations, enforcement investigations and other regulatory proceedings. They are also charged with analyzing and evaluating different business practices, including examining the use of algorithms and AI in lending and identifying deceptive dark patterns.
These coordinated regulator statements serve as an additional reminder that while the financial marketplace continues to rapidly evolve and innovate, the regulators are paying attention to and closely scrutinizing emerging business practices to ensure compliance with laws and regulations and will take action when they are not.