Citibank's $25.9M Fine: A Case Study in AI Governance Failure and Discriminatory Outcomes

Citibank faced a $25.9 million fine from the CFPB for discriminatory credit card practices, which involved using ethnicity as a proxy for fraud risk. This case highlights a critical AI governance failure where a seemingly accurate model produced discriminatory outcomes due to a lack of fairness auditing and disaggregated outcome monitoring. The incident underscores the importance of robust oversight beyond mere model accuracy, emphasizing the need for independent review of AI systems' impact on various demographic groups.