Principle 3:

Transparency and Accountability

Entities that offer AI financial products and services communicate with users in a complete and meaningful way. 3

Proactive Honest Disclosure

  • The product proactively surfaces information that is in the user’s best interest, even when unsolicited, potentially unwelcome, or contrary to a decision the user has already expressed commitment to.
    • When a user’s stated financial plan, intended transaction, investment strategy, or course of action carries material risk, the product discloses those risks clearly and without minimization.
    • When the user asks the product to evaluate or validate a decision they have already made or committed to, the product provides an honest, accurate assessment rather than endorsing the decision by default.
    • The product does not use language that is gratuitously positive, celebratory, or flattering about user decisions, financial products, or market conditions in ways unsupported by evidence.
  • Users receive timely, plain-language information and are protected in accordance with applicable consumer financial protection laws. 4
    • The entity that offers the product is authorized to provide legal, financial, or investment advice.
    • The entity satisfies all legal disclosure requirements as a floor, not a ceiling. 5
    • Disclosures use language that is unambiguous and easy for all users to understand.
    • The product provides users inline contextual disclosures for important warnings during interactions in addition to traditional legal disclosures.
    • Consumers are clearly and continuously informed when they are interacting with an AI system, including when human oversight is involved or absent in the interaction.
    • The product informs users when it is not suited to address certain types of tasks or requests, clearly discloses the limits of its capabilities, and warns users about the inherent risks of relying on automated advice.
  • The entity that offers the product is registered, licensed, or chartered with all applicable federal and state regulators for the financial activities the product facilitates, and such authorizations are current and publicly verifiable.
    • Where the product provides investment advice, the entity is registered as an investment adviser under applicable federal or state law, or falls within a recognized exemption disclosed to users.
    • Where the product facilitates lending or credit decisions, the entity complies with applicable licensing requirements in each state where consumers are served.
    • The entity does not rely on partnerships, white-labeling arrangements, or API integrations to perform regulated activities through an unregistered entity.
  • Consumers are provided specific, decision-relevant information at the moment a consequential recommendation or action is made. This obligation is not satisfied by generic legal disclaimers. The information provided must be specific to the particular recommendation, action, or product being presented.
    • At the point of any specific financial recommendation, the product surfaces: (a) the primary basis or data sources used to generate that recommendation; (b) material limitations, uncertainties, or conditions under which the recommendation may not apply to the consumer’s situation; and (c) at least one alternative course of action the consumer should consider. 6
    • Where a contextual disclosure relates to data practices—including what data is being used to generate the current recommendation and how it may be retained or shared—that disclosure is specific to the current interaction, not a restatement of general privacy policy.
    • Where a contextual disclosure relates to data practices—including what data is being used to generate the current recommendation and how it may be retained or shared—that disclosure is specific to the current interaction, not a restatement of general privacy policy.
  • The product’s foundation disclosures (e.g., account opening and onboarding) meet the following requirements.
    • The entity discloses its business model, revenue sources, registered status, data practices, and product scope before or at account creation.
    • The disclosures use plain language and are organized for comprehension, not legal compliance.
    • Foundation disclosures are not treated as a substitute for contextual disclosures made during interactions.
  • Contextual disclosures (e.g., those made at the point of recommendation or consequential action) meet the following requirements:
    • The product surfaces specific, decision-relevant information at the moment of each significant recommendation, product suggestion, or action initiation.
    • Disclosures are scaled to consequence, and higher-stakes or less reversible actions are accompanied by more specific and detailed contextual information.
  • The product’s disclosures are designed for conversational transparency (proactive surfacing in AI-driven interactions), and meet the following requirements.
    • In conversational AI contexts, the product proactively raises relevant considerations, flags risks, or names alternatives in the natural flow of interaction.
    • Conversational disclosures are treated as a supplement to, not a substitute for, measures taken to comply with the product’s other disclosure obligations, including those listed above. 7
  • The underlying AI model the product uses or the model provider powering the product is disclosed.
    • The entity that offers the product discloses whether it is built on a third-party foundation model and identifies the model provider.
    • Disclosures about the AI model used for the product are provided in product documentation.

Business Model Transparency

  • Revenue models, incentives, and potential conflicts are clearly disclosed and structured to prioritize consumer outcomes over engagement or monetization.
    • AI financial services clearly disclose all revenue sources from consumer interactions.
    • The entity that offers the product provides users a clear disclosure outlining potential conflicts of interest, financial incentives, affiliate relationships, or commercial relationships that may promote specific financial or investment products.
    • The product prioritizes consumer benefit over revenue generation in its recommendations to users.
    • Where the product surfaces sponsored recommendations or affiliate-linked products, those items are conspicuously labeled and distinguished from organic recommendations, in compliance with applicable endorsement and advertising disclosure guidelines and regulations.
    • The entity discloses to consumers, at the point of interaction where relevant, how data they share may be used to benefit the entity’s or third parties’ commercial interests, and what controls the consumer retains over such uses. 8

Explanation of Service and Pricing

  • Users are provided a complete, up-front disclosure of all potential fees and pricing in consumer-friendly formats.
    • The product provides complete information about fees before the user creates an account in easy-to-follow format and language.
    • The product discloses all potential future fees and charges, including variable fees, pricing charges, and conditional charges.
    • Real-time transaction fees are disclosed before the product executes a prompt or task, and user approval is required before proceeding.
  • Consumers are not subject to unfair terms or pricing.
    • When a transaction involves multiple components, all components are disclosed individually and as a combined total before user approval is sought.
    • The product does not execute recurring automatic transactions without prior explicit, informed user consent and provides clear notice before each recurring charge is processed.
    • If a user attempts to exit or cancel a transaction after reviewing the disclosed fees, the product provides a clear, easy-to-find, and frictionless pathway to do so without penalty.

Explainability

  • Consumers are provided an explanation for all of the product’s outputs, recommendations, and decisions in clear, accessible language that enables them to understand, challenge, and act on those outcomes. 9
    • The product generates recommendations and responses that include caveats to provide context, and those caveats and explanations can be understood by users.
    • The product provides embedded cites, references, or links to sources of information used to generate the output and/or walks the user through the steps taken to generate an output or conclusion.
    • The product’s financial or investing recommendations include: the primary reasoning behind the recommendation in plain language; at least one specific alternative the consumer could consider; an honest assessment of the recommendation’s limitations or the conditions under which it may not apply; and an indication of the confidence level or data currency underlying the recommendation.
    • The product’s financial or investing recommendations and all related elements are surfaced with the recommendation, not available only through follow-up prompting.
    • Where the product is involved in credit decisions or adverse actions, explanations meet the notice requirements set by applicable regulations, including providing specific, actionable reasons that allow users to understand and potentially improve their standing.
    • Where the product provides retirement or investment advice, disclosures are consistent with or exceed applicable regulations, including required disclosures of conflicts of interest, compensation arrangements, and whether the advice is in the consumer’s best interest.
  • Users are clearly informed in real time when third-party or live data sources are accessed during an interaction, and understand the scope of that access.
    • If the product draws on live data feeds during an interaction, such as market data, account balances, or credit information, it identifies the source and timing of that data.
    • The entity that offers the product makes API or data-source documentation publicly available.
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3

For AI-driven products that operate conversationally and in real time, this obligation is not satisfied by document-based disclosures alone. Transparency standards must match the interaction model, and information must reach the consumer at the moment it is relevant, in a form suited to the decision being made.
4

At minimum, all products should company with existing federal and state laws governing consumer financial products and services, including: the Equal Credit Opportunity Act (ECOA) and Regulation B for credit decisions; the Fair Credit Reporting Act (FCRA) for use of consumer report data; the Truth in Lending Act (TILA) and Regulation Z for credit disclosures; UDAP and UDAAP prohibitions enforced by the FTC and CFPB, respectively; applicable state data privacy laws including but not limited to the California Consumer Privacy Act (CCPA/CPRA) and other state-level equivalents; and sector-specific regulations applicable to the product’s registered activity.
5

Compliance with mandatory disclosure law does not constitute compliance with this framework’s transparency standards where those standards exceed legal minimums.
6

Generic liability disclaimers (e.g., “’this is not investment advice,”’ “’results may vary”’) do not satisfy this standard when used as the sole contextual disclosure. They may accompany substantive contextual information but do not substitute for it.
7

See Principle 4: Honesty and Non-Manipulation, Proactive Honest Disclosure, for the standards governing this conduct.
8

See Principle 7: Non-Exploitation of Consumer Data.
9

Explainability is also addressed under the company’s contextual disclosure obligation, where an explanation must be proactively surfaced at the point of each consequential output, not merely made available upon request.