Navigating the AI-Driven Compliance Landscape

In today’s fast-evolving legislative & regulatory compliance landscape, companies of all sizes need to navigate the complexities of multi-jurisdictional compliance and risk management to their business advantage.  Artificial Intelligence (AI) is reshaping the compliance landscape, offering both opportunities and challenges. In this blog, we’ll explore how AI impacts compliance, delve into relevant legislation and regulation, and examine notable legal cases that shed light on the potential risks of non-compliance.

State and Federal Legislative and Regulatory Examples

AI’s influence on compliance is mirrored in the legislative and regulatory efforts at both the state and federal levels. In 2023, for example, at least 25 states have introduced AI related bills, and 15 states have adopted resolutions or enacted legislation pertaining to the study or regulation of AI. These include:

  • Connecticut: requiring the Department of Administrative Services to inventory systems that employ AI to monitor for unlawful discrimination as a result of the use of AI.
  • Louisiana: employing a study on the impact of artificial intelligence in their operations.
  • Maryland: establishing a technology grant to assist certain manufacturing enterprises with implementing new technology relating to infrastructure (including AI).
  • Texas: creating a new advisory council to study and monitor AI systems that are employed by state agencies.

At the federal level, President Biden issued an Executive Order on October 30 to direct the setting of new standards for AI safety and security, including standards to protect privacy. The Order also directs the adoption of standards for the use of AI in healthcare settings, and establishes the White House Artificial Intelligence Council, to coordinate the activities of federal agencies regarding AI policies.

In addition, the Federal Trade Commission (FTC) and the Department of Justice (DOJ) have been actively updating regulations to address AI’s impact on consumer protection and antitrust concerns. Legislation like the Algorithmic Accountability Act is gaining traction, aiming to ensure transparency and fairness in AI systems.

Similarly, legislation is in place to ensure that national security remains protected in the realm of data privacy and cyber-attacks, with Congress enacting a law in 2021 to establish the Social Media Data and Threat Analysis Center by in 2021.  These measures demonstrate that AI is ever evolving in today’s realm, and that the impact to each business should be carefully analyzed and appropriately addressed.

Noteworthy Cases

Let’s delve into two noteworthy cases that address the real-world risks of non-compliance in the AI era.

  1. Cahoo v Fast Enterprises: In this case, the State of Michigan’s Unemployment Insurance Agency’s was sued over its implementation of an automated system to detect and punish individuals who submitted fraudulent unemployment insurance claims by using “logic trees” that automatically adjudicated a person’s matter. The plaintiffs claimed that the system violated their right to due process. The Court found that the plaintiffs sufficiently demonstrated an injury-in-fact.
  2. Huckabee v Meta Platforms: Former Arkansas Governor Mike Huckabee, along with several other authors, filed a class action lawsuit against, Meta Platforms (the parent of Facebook), Bloomberg, Microsoft, and the Eleutherai Institute. The suit alleges that the defendants infringed on the authors’ copyrights by using their work to train generative AI systems. Mr. Huckabee’s suit is similar to infringement lawsuits filed by other authors, including Michael Chabon, John Grisham, George R.R. Martin, and Jodi Picoult.

The legislative & regulatory compliance landscape is evolving rapidly, and AI is at the forefront of this transformation. State and federal laws are adapting to this new reality, with some states prioritizing data privacy, while others embrace AI in healthcare and beyond. Notably, the several lawsuits filed regarding the use or misuse of AI demonstrate the potential benefits and pitfalls of AI in compliance.

To protect your organization from compliance risk, it’s imperative that you stay informed about legislative & regulatory changes and emerging technologies. Be vigilant, ensuring your AI implementations comply with existing laws and regulations. Additionally, keep a watchful eye on legal cases that set precedents and can serve as valuable lessons for avoiding compliance pitfalls in your industry.

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