The Undergraduate Law Review at UC San Diego

Trust in financial institutions is essential to maintain because it forms the foundation of economic stability. Customers must be confident that their money and personal data are secure through transparency and disclosure of information to the customer about the system’s processes. Laws like the Securities Act impose consequences for misleading investors about a company’s inner workings or capabilities. The Gramm-Leach-Bliley Act (GLBA) ensures financial institutions inform customers of data collection and sharing practices, along with maintaining rigorous security measures. However, with the introduction of generative artificial intelligence models (GenAI) into financial services, risks for misuse and insufficient protection have increased. GenAI models and their decision-making processes are difficult to regulate under current disclosure requirements. To combat this, states have passed laws to minimize the risk of algorithmic discrimination and promote transparency. However, these measures are inconsistent, and while a federal AI privacy law is unlikely to pass, the industry can still streamline regulatory and compliance efforts by adopting common definitions of relevant terminology and expanding existing legislation to improve digital consumer data protections.