"Navigating the Patchwork of AI Regulation: What Businesses Need to Know"

 

As artificial intelligence (AI) becomes increasingly prevalent in our lives, concerns about consumer protection and privacy are on the rise. While other parts of the world are accelerating laws designed to protect consumers from advanced AI tools, such as chatbots that replicate human tasks and biometric surveillance of faces in public spaces, federal legislation has stalled in the US. This leaves the job of regulating AI tools, including Open AI's ChatGPT, to local governments.

Currently, six states have laws in place or will have laws by the end of 2023 to prevent businesses from using AI to discriminate or deceive consumers and job applicants: California, Colorado, Connecticut, Illinois, Maryland, and Virginia. New York City has also passed an ordinance regulating the use of AI in the hiring process. However, the protection consumers have in the US depends on where they live.

These laws aim to prevent AI "profiling," which involves collecting or sharing personal data, such as work, health, and financial records, and relying on a computer algorithm to evaluate the data to make decisions that come with legal consequences. Businesses using AI tools must explain the logic used to program the AI's decision-making capabilities and offer an opt-out to consumers. They must also undergo risk assessments detailing for consumers the benefits and risks of an AI tool.

While California's laws offer the most robust protections for the state's consumers, compliance challenges arise as laws are applied on a patchwork of state laws, bringing up compliance risks. The housing, employment, and insurance sectors are currently the most heavily impacted industries.

The lack of federal legislation means that the burden of protecting consumers falls on local governments, resulting in a fragmented approach to AI regulation. As data privacy attorney Goli Mahdavi of Bryan Cave Leighton Paisner notes, "We have mass adoption of AI tools across enterprises." As AI continues to advance, it is critical to ensure that regulations keep up with the pace of change to protect consumers' privacy and rights.