In October 2023, President Biden issued an executive order on the safe development and use of artificial intelligence (AI). It directed the HUD secretary to issue guidance on the use of AI in resident screening and in advertising of housing in order to avoid violating the Fair Housing Act or other Federal laws. HUD recently issued that guidance.
In announcing the availability of the new guidance, Demetria McCain, Principal Deputy Assistant Secretary Fair Housing and Equal Opportunity said, “The Fair Housing Act prohibits discrimination on the basis of race, color, national origin, religion, sex (including gender and sexual orientation), disability, and familial status. Housing providers, tenant screening companies, advertisers, and online platforms should be aware that the Fair Housing Act applies to tenant screening and the advertising of housing, including when artificial intelligence and algorithms are used to perform these functions.”
Disparate impact is a problem
HUD may judge that a policy or practice violates the Fair Housing Act if it has a discriminatory effect, which they define as having a disparate impact on a protected class. This disparate impact may be due to consideration of factors such as credit history, criminal justice encounters or past evictions that may be correlated to the applicant being a member of a protected class even if not these factors are not caused by the applicant being a member of a protected class.
A practice that causes or perpetuates segregation may also be taken as indicating that the housing provider is violating the act.
The resident screening guidance notes, “If a plaintiff or HUD proves the tenant screening policy or practice has a discriminatory effect, the burden shifts to the defendant (or respondent in an administrative action) to prove that the policy or practice is necessary to achieve a substantial, legitimate, nondiscriminatory interest. This interest may not be hypothetical or speculative. Only screening criteria and standards – including complex models – that are well-tailored to predict future behavior relevant to tenancy can be considered necessary to achieving a legitimate interest.”
The guidance indicates that, even if the housing provider uses a third-party screening service, the housing provider is responsible for making sure that its housing decisions are being made in a non-discriminatory manner.
Targeted ads are problematic
HUD’s concern with advertising is that the improved ability of AI to target ads to specific groups may direct ads either toward or away from protected groups. This may be done intentionally by the way the target audience for the ad is specified or it may be done by the algorithm itself. The algorithm may have determined that members of certain groups or residents of certain neighborhoods may be more likely to click on an ad and so it may direct the ad to members of those groups or neighborhoods even if this was not the intent of the advertiser.
The guidance for use of online platforms recommends, “Advertisers should not utilize categorization tools for housing-related ads that segment audiences on the basis of protected characteristics or close proxies, and ad platforms should consider disabling some or all categorization functions for housing-related ads.”
HUD’s resident screening guidance can be found here. HUD’s guidance for use of online platforms can be found here.
