Are there fair lending concerns when a financial Institution utilizes a third-party vendor that provides data for marketing or assists in the development of a credit underwriting model containing digital algorithms?

Answer: Yes. The Financial Institution needs to be aware of what makes up the data that is obtained and how the data is applied. These algorithms may be filtered by zip codes, level of education or purchasing behaviors. The Financial Institution needs to ensure the algorithms used do not cause disparate impact by eliminating protected class individuals. Regulators lay the responsibility of the use of algorithms on the Financial Institutions that use the data and not the vendors that provided the data.