CRE Firms Should Keep Track of State AI Legislation

While watching what types of artificial intelligence technology are in the CRE and general software in use at a CRE company, executives should pay attention to what might affect how the systems have an impact on operations.

There are technical limitations that can result from large language model hallucination (when AI makes things up), machine learning with a bad choice of training data, dependence on third-party data sets, and more. However, that is only part of what needs watching. Another big part is legislation.

There are federal attempts at regulating AI but put even that to the side for a moment and consider state legislation. Multiple organizations are tracking what the states are doing. Some law firms like BCLP and Husch Blackwell seem to have the most inclusive counts at the moment.

More than 30 states have proposed and maybe also enacted legislation. Some are directly pointed at AI usage. Some are focused on consumer privacy or other areas where actions will have implications on how AI programs can work and what you can do with them. Some of the states that have at least considered legislation include Washington, Oregon, California, Montana, Colorado, New Mexico, Texas, Oklahoma, Louisiana, Minnesota, Florida, Alabama, Georgia, South Carolina, Tennessee, Illinois, Indiana, Ohio, Kentucky, Western Virginia, Virginia, Delaware, Maryland, Pennsylvania, New York, Connecticut, Rhode Island, Massachusetts, Vermont, New Hampshire, and Maine.

Texas, for example, passed the Texas Data Privacy and Security Act last year. It will allow consumers to opt out of profiling. Companies would also have to perform data protection assessments for high-risk profiling activities. What didn’t pass, but was at least introduced, was a law that would prohibit the use of AI to provide counseling, therapy, or other mental health services.

Washington State passed privacy legislation but hasn’t yet passed bills that would forbid employers from using AI systems to evaluate or make decisions on employment. Indiana also passed a consumer privacy law giving people the ability to opt out of inclusion but also has rules for profiling and automated decision-making. Kentucky legislators early this year proposed a bill that would prohibit bots from interacting with people with the intent of misleading them about the automated nature of the encounter as part of trying to sell goods or services. It hasn’t been enacted but could be in the future.

The list goes on. Some of the laws might not have direct effects on a CRE business, but then again, they might. Only by monitoring legislation and considering how it might affect your business can you know whether there are adjustments — simple or significant — that you’ll need to make.