Certified Information Privacy Professional – United States (CIPP/US) — Question 65

Acme Student Loan Company has developed an artificial intelligence algorithm that determines whether an individual is likely to pay their bill or default. A person who is determined by the algorithm to be more likely to default will receive frequent payment reminder calls, while those who are less likely to default will not receive payment reminders.
Which of the following most accurately reflects the privacy concerns with Acme Student Loan Company using artificial intelligence in this manner?

Answer options

• A. If the algorithm uses risk factors that impact the automatic decision engine. Acme must ensure that the algorithm does not have a disparate impact on protected classes in the output.
• B. If the algorithm makes automated decisions based on risk factors and public information, Acme need not determine if the algorithm has a disparate impact on protected classes.
• C. If the algorithm’s methodology is disclosed to consumers, then it is acceptable for Acme to have a disparate impact on protected classes.
• D. If the algorithm uses information about protected classes to make automated decisions, Acme must ensure that the algorithm does not have a disparate impact on protected classes in the output.

Correct answer: A

Explanation

The correct answer, A, emphasizes the need for Acme to ensure that its algorithm does not adversely affect protected classes when making automated decisions. Option B is incorrect because it suggests that Acme does not need to assess the impact on protected classes, which is an essential aspect of ethical AI use. Option C is misleading as disclosing methodology does not justify any negative impact on protected classes, and option D, while related, does not encompass the broader risk factors that could lead to disparate impacts.