ACI Warns That Proposed AI Regulations Could Harm California Consumers
Arlington, VA – The American Consumer Institute (ACI) is raising concerns over the proposed Automated Decision-Making Technology and Risk Assessment regulations in California, warning that they could stifle innovation, burden businesses with unnecessary compliance costs, and ultimately reduce consumer choice.
In a letter to regulators, ACI’s Director of Technology Policy, Logan Kolas, emphasized that artificial intelligence (AI) has the potential to significantly benefit California consumers across industries, including healthcare, finance, manufacturing, and logistics. However, the proposed regulations risk undermining these benefits by imposing overly broad and restrictive requirements on businesses.
Key Concerns with the Proposed Regulations:
- Overreach Beyond Legislative Intent – The regulations attempt to extend the California Consumer Privacy Act (CCPA) to AI applications and certain employment applications, areas traditionally subject to a lighter regulatory touch. ACI urges policymakers to allow the state legislature to debate such sweeping changes rather than imposing them through rulemaking.
- Burden on Routine Business Operations – Many businesses would be required to conduct costly and time-consuming risk assessments for basic functions like inventory management and customer loyalty programs. This could lead companies to scale back or eliminate services that benefit consumers, such as personalized discounts and recommendations.
- Higher Prices and Reduced Consumer Choice – By discouraging AI-powered efficiency in supply chains and operations, the regulations could lead to higher costs for businesses, which would ultimately be passed on to consumers in the form of increased prices and fewer choices
ACI is urging regulators to refine the rules to focus specifically on genuine privacy risks while avoiding unnecessary burdens that could hinder economic growth and technological advancement.
“We urge the agency not to use a hammer to do the job of a scalpel,” said Kolas. A more targeted approach will protect consumers without stifling the very innovations that make their lives better.
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