Bill > S08115

This bill establishes comprehensive regulations for the use of automated lending decision-making tools by banks and financial institutions in New York state. The legislation defines automated lending decision-making tools as software using algorithms, computational models, or artificial intelligence to materially automate lending decisions, and requires covered entities to conduct annual impact assessments of these tools. These assessments must evaluate the tool's objectives, underlying algorithms, potential biases, and discriminatory outcomes, with a focus on protecting consumers from unfair treatment based on characteristics like race, gender, age, or disability. The bill mandates that financial institutions notify loan applicants about the use of such tools, including the criteria used, data collection methods, and reasons for potential loan denials. If an impact assessment reveals discriminatory outcomes, the institution must report these findings to the state banking department, which can require the entity to cease using the tool. The legislation also empowers the state superintendent to investigate and enforce these regulations, with provisions for additional reporting requirements or penalties. Importantly, loan applicants will have the right to be informed about and potentially appeal automated lending decisions, providing a layer of consumer protection against potential technological biases in the lending process.

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https://www.nysenate.gov/legislation/bills/2025/S8115