HR 4801 creates regulatory sandbox that leaves consumers at risk
WASHINGTON DC – In a letter sent to the House Financial Services Committee today, Consumer Reports detailed its opposition to a bill that would allow financial firms testing AI systems on customers to seek waivers to avoid compliance with consumer protection laws. HR 4801 creates a regulatory sandbox for firms and will be the subject of a hearing by the committee, which will be livestreamed beginning at 10am EST.
CR’s letter notes, “While we appreciate the profound impact innovation can have on increasing competition and delivering consumer benefits in the financial sector, this bill, as currently written, would put consumers in harm’s way by weakening much needed regulatory oversight in the already high-risk, low-transparency space in which artificial intelligence exists. The approach outlined in this bill sets a dangerous precedent and puts hard won safeguards for consumers at serious risk.”
CR outlined three major areas of concern in its letter:
Weakened regulatory oversight: The bill effectively grants financial institutions regulatory forbearance by allowing them to experiment with AI systems while seeking waivers from consumer protection laws. It does not allow agencies to establish additional AI test project categories after approving initial projects, which limits regulators’ ability to respond to emerging AI risks and applications. Furthermore, instead of requiring companies to prove their AI systems are safe, regulators must prove danger within tight deadlines or harmful systems could automatically proceed. This is particularly concerning given that agencies lack dedicated funding to review complex AI systems within the 120-day window required by the bill.
Instead of requiring applicants to demonstrate benefits of AI systems, the bill simply requires companies to explain them. This lower evidentiary bar could mean that projects could win approval based on speculative or overstated consumer benefits rather than proven value. Finally, the bill’s scope concerning Big Tech companies is dangerously ambiguous. Companies like Google (with its Agent Payment Protocol) may exploit banking partnerships to access sandbox benefits while evading traditional financial regulation.
Insufficient consumer safeguards: The bill lacks critical transparency and accountability requirements for AI systems while potentially allowing waivers from existing Equal Credit Opportunity Act protections. Disparate impact liability under ECOA is essential for detecting discrimination in opaque AI systems where intentional bias may be difficult to prove but discriminatory outcomes are measurable and real.
The bill does not require companies to test their AI systems for bias or to submit those systems to formal audits that would assess their fairness, accuracy, and potential harm leaving consumers vulnerable to discriminatory or opaque decision-making. These risks are made worse by the bill’s failure to provide meaningful redress mechanisms for consumers harmed by AI-driven decisions affecting their ability to access credit, housing, employment, or essential banking services.
Misaligned Incentives: The bill does not address the risk of firms optimizing AI systems for institutional profits at the cost of consumer welfare. The emergence of agentic AI tools that can initiate transactions, manage bills, or make purchases introduces new challenges around transparency, consent, and control. Without clear guardrails, consumers may unknowingly delegate sensitive financial actions to AI systems with limited ability to monitor, override, or understand those choices.
For a more detailed explanation of CR’s concerns about HR 4801 and what is needed to better protect consumers, see the full letter to the committee.
Media Contact: Michael McCauley, michael.mccauley@consumer.org