Four U.S. federal regulatory agencies have issued the “Interagency Statement on the Use of Alternative Data in Credit Underwriting.” 

Developed in response to a U.S. Government Accountability Office recommendation, the statement focuses on consumer protection implications of the use of alternative data in underwriting.

Through the statement, the federal agencies:

i) seek to encourage the responsible use of alternative data;

ii) explain that many factors associated with using alternative data, including cash flow data, may increase or decrease consumer protection risks; and

iii) explain that a well-designed compliance management program provides for a thorough analysis of relevant consumer protection laws and regulations to ensure firms understand the opportunities, risks, and compliance requirements before using alternative data.

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