In a new policy initiative named ‘Time is Money’, the Biden administration has instructed the CFPB to closely examine the use of chatbots by banks.
According to Reuters, this move is part of a broader effort to streamline consumer interactions with financial institutions and eliminate inefficient customer service models.
Announced last Monday, this initiative is driven by a desire to stop businesses from using complex processes as a tactic to discourage consumers from claiming refunds or cancelling unwanted subscriptions, thus prioritising corporate profits over customer satisfaction.
The CFPB is tasked with issuing guidance to curb the use of chatbots that fail to effectively address customer needs, often leaving them trapped in service “doom loops”. According to the administration, while chatbots are meant to expedite service, they frequently fail to resolve complex issues, instead misguiding consumers and deflecting them from speaking to human representatives.
The planned regulations include identifying unlawful uses of automated systems, such as instances where customers are misled into believing they are conversing with humans. Additionally, the White House has expressed a commitment to this cause, stating that the initiative represents a new phase in consumer protection rather than an attempt to discredit corporations broadly.
Moreover, the initiative extends beyond the financial sector. The Department of Health and Human Services will encourage health plan providers to simplify access to human customer service, and the Federal Communications Commission will investigate similar practices within the telecommunications industry.
CFPB Director Rohit Chopra highlighted the broader regulatory focus, which also aims to abolish excessive fees and convoluted service procedures that frustrate consumers. A rule proposed by the CFPB would mandate companies to allow direct access to human service agents with the press of a button, addressing a top complaint among consumers regarding long automated messages.
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