Is anyone else fascinating by ChatGPT and other natural language AI chatbot’s? Maybe you’re wondering if this new piece of technology can help you with your job as a compliance professional. Maybe you’re worried that AI technology will make compliance professionals obsolete.

I wanted to see what ChatGPT could do if it replaced me at the UCUA compliance help desk. I fed the chatbot a couple compliance questions sent to me to see how it did with answering.  Here are the results:

Question #1: According to Reg B, does a lender need to provide adverse actions for business loans?

ChatGPT Response: No, the Equal Credit Opportunity Act (ECOA) and its implementing regulation, Regulation B, do not require lenders to provide adverse action notices for business loans. Adverse action notices are typically required for consumer credit transactions, such as loans made to individuals for personal, family, or household purposes. However, lenders may choose to provide adverse action notices for business loans voluntarily or as required by state or other applicable laws.

My Response: Yes. The type of Adverse Action you must provide when denying a business loan application depends on the size of the business.

For a business that had gross revenues of $1 million or less in its preceding fiscal year, the statement of action taken may be given orally or in writing at the time when adverse action is taken. The disclosure of an applicant’s right to a statement of reasons and the ECOA notice may be given at the time of application.

For a business that had gross revenues in excess of $1 million in its preceding fiscal year, you must notify the applicant within a reasonable time, orally or in writing, of action taken and provide a statement of reasons and the ECOA notice if the applicant requests it within 60 days of notification.

Question #2: Is there a timing requirement for statements to be sent out on HELOCs and on Business Lines of Credit?

ChatGPT Response: Yes, there is a timing requirement for statements to be sent out on home equity lines of credit (HELOCs) and on business lines of credit. Regulation Z, which implements the Truth in Lending Act (TILA), requires creditors to send periodic statements for open-end credit plans, including HELOCs and business lines of credit. For HELOCs, the periodic statement must be sent at least once every billing cycle, and the billing cycle must not exceed 25 days. For business lines of credit, there is no specific timing requirement for periodic statements, but the statements must be sent often enough to ensure that consumers are able to detect and correct any errors in a timely manner. In practice, this means that statements should be sent at least monthly. It is important to note that these requirements are minimum standards, and creditors may choose to provide more frequent or detailed statements if they wish.

My Response: First off, there is no requirement to send periodic statements out on business purpose loans, which aren’t subject to Reg Z at all. Outside of anything you promise in your loan contract, do what you want on those.

For HELOCS’s you have a 14-day or 21-day timing requirement for periodic statements depending on if you have a grace period or not. Specifically, this is what this portion of Reg Z states:

(B) Open-end consumer credit plans. For accounts under an open-end consumer credit plan, a creditor must adopt reasonable procedures designed to ensure that:

(1) If a grace period applies to the account:

(i) Periodic statements are mailed or delivered at least 21 days prior to the date on which the grace period expires; and

(ii) The creditor does not impose finance charges as a result of the loss of the grace period if a payment that satisfies the terms of the grace period is received by the creditor within 21 days after mailing or delivery of the periodic statement.

(2) Regardless of whether a grace period applies to the account:

(i) Periodic statements are mailed or delivered at least 14 days prior to the date on which the required minimum periodic payment must be received in order to avoid being treated as late for any purpose; and

(ii) The creditor does not treat as late for any purpose a required minimum periodic payment received by the creditor within 14 days after mailing or delivery of the periodic statement.

(3) For purposes of paragraph (b)(2)(ii)(B) of this section, “grace period” means a period within which any credit extended may be repaid without incurring a finance charge due to a periodic interest rate.

My Thoughts:

• ChatGPT was wrong on Question #1. Business credit is covered by Reg B and notification of adverse action is always required. The timing, content and method depends on the size of the business that applied.
• ChatGPT was also wrong on Question #2. Business credit is not subject to Reg Z, so the periodic statements covered by Subpart B of Reg Z, won’t apply to any business purpose lines of credit. The timing requirement chatbot gave for consumer purpose HELOCs was also wrong.
• ChatGPT didn’t provide any regulator citations. I always do.

So, ChatGPT won’t be replacing our jobs quite yet. But I can see some applications that might make your job as a compliance professional easier.  I’ll test some of these in the future:

• Asking ChatGPT for training ideas
• Asking ChatGPT to write policy and procedures
• Asking ChatGPT to create checklists

Of course, you would need to double check all output to make sure chatbot is correct – but it might save some time coming up with a rough draft.

Whew! Job security for now.