CFPB to Address Use of “Doom Loops” and Chatbots in Financial Institutions

On August 12, 2024, the White House published a Fact Sheet that describes a new government-wide effort to crack down on all the ways that companies create unnecessary stress and inconvenience, lowering people’s quality of life. The initiatives include action items for the CFPB to address "doom loops" in customer service and to manage the use of chatbots.

First, President Biden and Vice President Harris want to address and crack down on customer service “doom loops” or the use of too many menu options and automated recordings when trying to reach a company’s customer service. These “doom loops” result in wasted time and even failure to get the necessary support on the customers’ end. The CFPB will initiate a rulemaking process that would require companies under its jurisdiction to let customers talk to a human by pressing a single button.

Second, the administration wants to address the limitations and shortcomings of customer service chatbots. As stated on the Fact Sheet, chatbots often have limited ability to solve more complex problems and frequently provide inaccurate information. To address this, CFPB is planning to issue rules or guidance to crack down on ineffective and time-wasting chatbots used by banks and other financial institutions in lieu of customer service. The CFPB will identify when the use of automated chatbots or automated artificial intelligence voice recordings is unlawful, including in situations in which customers believe they are speaking with a human being.

The Fact Sheet can be found here.

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