The California Consumer Privacy Act (CPPA) was established in 2020 to protect the rights and information of Californians. As technology continues to develop, legislation must be regularly updated to reflect new trends.
The new ADMT regulations are part of an amendment to the CPPA to ensure residents of California have the right to opt out of businesses using AI and automated decision-making technology or to access information about how it has been used and what information is stored.
The draft will also ensure that employers notify employees and applicants that ADMT and AI are in use, whether decisions were made based on the information provided by this technology, and that they can access information about how the technology is used.
The main role of the new legislation is to ensure consumers and employees are pre-notified about the potential use so they have the opportunity to opt-out.
At present, these draft regulations have not been put into practice, but are being presented as a way to ensure California is at the forefront of U.S. AI and technology regulation.
The draft ADMT regulations would apply to all process, software, or system that processes the personal information of customers or employees to provide a decision.
This kind of technology provides profiling for a range of sectors and helps to predict behaviors, performance, health, reliability, and more. This kind of profiling can be used when making decisions about the suitability of an applicant for a job role or for businesses that want to determine the suitability of potential new customers.
The draft regulations for the use of ADMT focus on providing the subject with a pre-use notice and the right to opt-out. This would be in the form of clear language detailing the proposed purpose, the consumer's right to opt-out, the consumer's right to request access to information about how the technology will be used, and provide a quick and easy way for the customer to obtain more information.
As with any draft regulation, there is the potential for further amendments as industry experts examine how it will affect their business. Further discussion will be needed before any regulations are passed into law.
Potential new ADMT regulations will go through the rule-making process in 2024 and will work with potential new risk assessment regulations that the CPPA drafted in September. This would see businesses conduct a risk assessment on potential risks to consumer privacy when using their personal information.
These new regulations have the potential to impact all industries that use AI and automated decision-making technology. This includes the financial sector where customer information is processed to assess potential risk factors with loans and financial products.
Financial institutions must explore the risk factors of customers when providing products like loans, mortgages, and credit facilities. Automated systems and AI minimize the amount of man-hours workers have to put into applications and allow a faster turnaround for decisions.
The gambling industry is another that makes use of emerging technologies to streamline processes and improve customer services. One way that AI and automated decision-making technology can be used to study customers betting and spending patterns, this can then be used to provide a more tailored experience including personalized promotions like matched deposit bonuses, odds boosts, and more (Source (News - Alert): https://sportslens.com/california/betting-apps/).
The application of automated technology in these and other industries can be used to save time and money, however, businesses have been able to move ahead without the permission of customers.
Changes to current regulations to monitor the use of AI and automated decision-making technology could see big changes to existing processes. Providing customers with access to information and giving them the option to opt out of these processes will result in time-consuming alternatives.
Because of this, there may be some pushback from certain sectors that will want the freedom to streamline processes and embrace the latest technologies.
While these proposals are just for Californian Law, President Biden has also issued an Executive Order for the responsible use of AI in government.
The Order focuses on protecting U.S. citizens from any risks that AI systems pose. It would require AI system developers to share test results with the government.
Privacy is also a significant part of the Order as AI and automated systems can extract information more easily. The Order states that the government is dedicated to strengthening technology and research to preserve privacy and evaluate how businesses collect and use the information they gather.
An Executive Order was signed by California's Governor Gavin Newsome in September that would see state agencies integrate AI into operations and explore the privacy and security risks posed by AI. This Order and the ADMT will help position California as one of the most regulated states in the U.S. and provide businesses with a detailed framework that they can work within.
While some may see regulations as limiting the use of new technology, the risk of operating in states without an existing regulatory framework is that things can change quickly. Areas that have clearly defined regulations can often be a more attractive proposition to startups and existing tech businesses that want stability as they grow.
2024 will be an interesting time for Californians as AI and automated technology is put under the microscope.
