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Menendez presses witnesses on the potential impacts Artificial Intelligence could have on consumers

The Senator inquired about how to ensure AI doesn’t contribute to scams and fraud or expand existing disparities for marginalized communities in financial services

WASHINGTON, D.C. – U.S. Senator Bob Menendez (D-N.J.) Wednesday questioned witnesses, during a U.S. Senate Banking, Housing and Urban Affairs Committee hearing entitled “Artificial Intelligence in Financial Services.”

Menendez asked witness Melissa Koide, Director and CEO of FinRegLab, about how AI may potentially contribute to the rise of fraud and scams in the future.

The Senator also questioned witnesses about what financial institutions should and could do to minimize the risk of AI powered scams targeting them and their customers.

“I worry that AI has the power to compound the existing problem of fraud in the financial system.  According to the FTC, consumers reported losing nearly $9 billion to fraud in 2022, with more than a quarter of those losses coming from imposter scams,” Menendez said. “Well, consumers could see themselves becoming victims of increasingly sophisticated scams as a result of AI, both due to increasingly accurate deepfakes and more precisely targeted social engineering attacks. And it’s not just the consumers that are being targeted. There have been reports of scammers using AI to imitate a consumer’s voice in order to trick their bank or credit card servicer into transferring funds or giving away information.”

The Senator asked Professor Michael Wellman, the Richard H. Orenstein Division Chair of Computer Science and Engineering at the University of Michigan, about what can be done to ensure AI does not expand existing disparities in accessing financial services.

“Because of the way AI learns by studying large sets of data, if there is bias in the underlying data then it can become encoded in the AI’s decision-making process,” Menendez said. “In financial services, this can exacerbate existing disparities in areas such as mortgage lending, capital allocation, and credit availability, among others.”

The Senator concluded by inquiring about how Congress should be thinking about issues of accountability and oversight with AI.

Over the last several months, Sen. Menendez has participated in several member-level meetings and hearings to explore how Congress can best address the threats and challenges posed by the rise of AI across a number of sectors and industries, including the financial system. As part of his Economic Statecraft for the Twenty-First Century Act, Sen. Menendez has included provisions to revitalize how the rules-based order and institutions deal with the challenges posed by technology and artificial intelligence.

In 2019, Sen. Menendez led a letter to then-Secretary of State Mike Pompeo urging him to strengthen the Trump Administration’s diplomatic efforts around emerging technologies to make certain the United States leads in setting international standards and norms for the AI field in ways that are congruent with our nation’s interests and values.

Jay Edwards

Born and raised in Northwest NJ, Jay has a degree in Communications and has had a life-long interest in local radio and various styles of music. Jay has held numerous jobs over the years such as stunt car driver, bartender, voice-over artist, traffic reporter (award winning), NY Yankee maintenance crewmember and peanut farm worker. His hobbies include mountain climbing, snowmobiling, cooking, performing stand-up comedy and he is an avid squirrel watcher. Jay has been a guest on America’s Morning Headquarters,program on The Weather Channel, and was interviewed by Sam Champion.

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