On November 10, 2021, Relman Colfax published the Second Report in its role as fair lending Monitor of Upstart Network (“Upstart”), pursuant to an agreement between Upstart, the NAACP Legal Defense Fund (“LDF”), and the Student Borrower Protection Center (“SPBC”). Upstart’s lending platform relies on Machine Learning-based Artificial Intelligence (“ML” and “AI”) models and non-traditional applicant data—including data related to borrowers’ higher education—to underwrite and price consumer loans. LDF and the SBPC raised concerns with Upstart that the use of educational criteria can lead to discriminatory lending outcomes, particularly for communities of color, leading to the appointment of an independent fair lending Monitor. As Monitor, Relman Colfax is responsible for evaluating and making recommendations regarding the fair lending implications of Upstart’s lending platform.

The Second Report addresses ongoing analyses of whether Upstart’s model results in a disproportionate adverse impact on any protected classes, and if so, whether there are alternative practices that maintain the model’s predictiveness but result in fewer disparities. This Report discusses results regarding disparities, as well as our methodologies for choosing among potential alternatives that result in fewer disparities. However, our evaluation of alternatives is ongoing and we are not yet in a position to determine whether a viable alternative model exists and, if so, what changes to Upstart’s Model we would recommend.  This Report also analyzes whether variables used in Upstart’s model function as close proxies for protected classes. Our analyses suggest that Upstart’s input variables do not appear to be meaningful predictors of race and national origin. That said, given the AI/ML nature of Upstart’s Model, our methodologies have inherent limitations and we cannot eliminate entirely the possibility that proxies exist. Future reports will address further analyses, including whether we will make any recommendations to Upstart regarding the adoption of an alternative model that results in fewer disparities.   

LDF, SBPC, and Upstart have jointly issued a release regarding the Second Report, available here.

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