Legal and Privacy Concerns Regarding the Credit Scores Assessed by Artificial Intelligence

Abstract

This paper explores the complex relationship between the use of AI in credit scoring and the development of social credit systems in People’s Republic of China. The use of AI in credit scoring and social credit systems in China presents several concerns. Data privacy issues arise due to the integration of AI, potentially leading to discriminatory outcomes. The societal impact is substantial, affecting access to financial services and job opportunities, which could result in social stratification. Individuals' freedoms and opportunities may be influenced by these algorithm-driven evaluations, possibly causing social exclusion. Moreover, the opacity of AI algorithms makes it difficult for individuals to challenge decisions made by these systems. This lack of transparency and accountability raises serious ethical and legal questions about the legitimacy of decisions made by AI. The rapid advancement of AI technologies also outpaces the development of regulatory frameworks, leaving a gap in oversight and control. Regulators face the challenging task of keeping up with technological changes without stifling innovation. They must strike a delicate balance between protecting consumer rights and privacy, ensuring fairness and transparency in AI decision-making, and fostering technological innovation that can drive economic growth and societal progress. This is not an easy task given the complexity and dynamism of AI technologies, the global nature of data flows, and the cross-jurisdictional challenges involved.