On September 16, 2022, Relman Colfax published the Third 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 (“SBPC”). 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 Third Report explains application of our fair lending testing methodologies to a recent version of Upstart’s Model, including identifying what would likely have been a viable less discriminatory alternative model. Before the analyses were completed, Upstart updated its Model. Accordingly, instead of recommending adoption of that specific less discriminatory alternative model, the Report recommends that Upstart apply these methodologies to its existing algorithms and resulting Model or to any imminent upcoming model updates, and to future model updates. If a viable less discriminatory alternative model is identified, we recommend that Upstart adopt that alternative. The Report separately addresses proxy risks related to sex and age and does not find quantitative evidence that variables in Upstart’s model are functioning as close proxies for those characteristics. At the same time, the Report does provide recommendations to mitigate future potential age-proxy risks specifically related to non-traditional variables. A Confidential version of the Report has been provided to the parties. This Public version of the Report removes confidential proprietary or commercially sensitive information, as appropriate.   

In our capacity as Monitor we have engaged Sentrana to serve as a consultant. Sentrana is a leading firm in the field of machine learning and artificial intelligence. We have also engaged Dr. Bernard Siskin of BLDS. Dr. Siskin is an expert on the use of statistical analyses to measure discrimination in the financial services industry.

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