The CFPB recently highlighted the extensive use of chatbots by financial institutions, warning that if poorly deployed, the technology can lead to customer frustration, reduced trust and violations of the law.

According to the bureau, financial institutions should avoid using chatbots as their primary customer service delivery channel when it is reasonably clear that the chatbot is unable to meet customer needs.

The CFPB found the use of chatbots raised several risks, including:

• Noncompliance with federal consumer financial protection laws. Financial institutions run the risk that when chatbots ingest customer communications and provide responses, the information chatbots provide may not be accurate, the technology may fail to recognize that a consumer is invoking their federal rights, or it may fail to protect their privacy and data.
• Diminished customer service and trust. When consumers require assistance from their financial institution, the circumstances could be dire and urgent. Instead of finding help, consumers can face repetitive loops of unhelpful jargon. Consumers also can struggle to get the response they need, including an inability to access a human customer service representative. Overall, their chatbot interactions can diminish their confidence and trust in their financial institutions.
• Harm to consumers. When chatbots provide inaccurate information regarding a consumer financial product or service, there is potential to cause considerable harm. It could lead the consumer to select the wrong product or service that they need. There could also be an assessment of fees or other penalties should consumers receive inaccurate information on making payments.

Read the complete report.