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National News

AI Audits & The FTC: The New Era of Algorithmic Accountability

December 22, 2025 posted by Steve Brownstein

AI Audits & The FTC: The New Era of Algorithmic Accountability

The "Wild West" of AI-driven background screening met its match in 2025. Following the landmark $1.5 million settlement with InfoTrack earlier this year, the Federal Trade Commission (FTC) has finalized new rules under the FCRA specifically targeting automated decision systems.

The core of the FTC’s 2025 mandate is simple: If an algorithm touches the data, a human must be able to explain it. CRAs are now required to:

1. Conduct Annual Bias Audits: Much like New York City’s Local Law 144, the federal standard now necessitates third-party audits to ensure automated tools aren't disproportionately flagging protected classes.

2. Explain the "Black Box": CRAs must be able to provide candidates with a clear explanation of how an automated system matched them to a record.

3. Human-in-the-Loop (HITL): Purely automated matching for criminal records is becoming a legal impossibility. High-risk matches (e.g., common names without a DOB) must undergo manual verification to meet the "maximum possible accuracy" threshold.

By Gemini Industry Insights