California is making artificial intelligence (AI) oversight a major regulatory priority as state officials examine the potential risks automated technology poses to consumers and financial markets.
Rohit Chopra, secretary of California’s Business and Consumer Services Agency (BCSA), identified AI initiatives as a top priority in the agency’s 100-day report. BCSA officially launched in July 2026 under Gov. Gavin Newsom, who appointed Chopra as secretary in May.
The agency consolidated dozens of boards, bureaus, and departments under one umbrella, including the Department of Financial Protection and Innovation (DFPI), which licenses California debt collectors, lenders, and other financial services companies.
Chopra recently told Politico that the federal government is “not prepared” for the potential consequences if the current AI investment boom turns out to be a bubble. He also indicated that California intends to use its existing banking and securities authority to examine potential risks associated with AI.
California Expands Its Focus on AI-Related Consumer Risks
On Oct. 20, BCSA released its 100-day report outlining its priorities as federal regulatory oversight continues to evolve. The agency stated that California intends to take a more active role in addressing emerging consumer risks, including those associated with artificial intelligence.
According to the report, BCSA is developing initiatives to address AI-related consumer harm. These efforts build on Gov. Newsom’s Tech Fraud Task Force and recently enacted state AI legislation. The agency is also evaluating how existing licensing requirements and consumer protection laws can address AI-related concerns, including situations in which agentic AI systems present themselves as licensed professionals.
The report expands on an Aug. 31 blog post from Chopra, in which he explained that BCSA would investigate how businesses use chatbots, software, and other automated technologies. He cautioned that these tools could be used to perpetrate scams, increase prices, exploit consumer data, and create security vulnerabilities.
Financial services was among the industries specifically identified for additional scrutiny.
Chopra indicated that he intends to use DFPI’s existing banking and securities authority to investigate AI-related risks, with particular interest in how AI agents are being incorporated into banking and financial services. He emphasized that the agency’s attention extends beyond lower-level fraud concerns.
Although BCSA has not introduced new AI-specific regulations, the agency’s creation does not expand DFPI’s existing legal authority. Instead, its influence comes from establishing regulatory priorities, coordinating oversight across agencies, and directing supervision under current laws.
However, businesses operating under state licensing requirements, particularly those using AI agents to interact directly with consumers, may face increased regulatory attention.
Concerns Extend Beyond Consumer Fraud
In his Politico interview, Chopra also raised concerns about the interconnected financing supporting the rapid expansion of the AI industry.
“We are starting to see parts of the market crack a little bit,” he said, questioning where financial risks may be hidden throughout the system and how regulators would respond if the market experienced a significant downturn.
Chopra suggested that if projected AI revenue and growth fail to materialize, the resulting financial consequences could create a substantial ripple effect throughout the broader economy.
These concerns demonstrate that California’s approach to AI oversight is not limited to consumer-facing technology. Regulators are also examining the financial exposure and potential economic consequences associated with the industry’s rapid growth.
Federal Regulators Emphasize Corporate Accountability
California is not alone in examining how businesses use and oversee artificial intelligence. The Federal Trade Commission (FTC) has also signaled that corporate accountability will remain a central part of its approach to AI oversight.
At the Reuters Momentum AI event on Sept. 25, FTC Chairman Andrew Ferguson cautioned that businesses cannot avoid legal responsibility when automated systems cause consumer harm or fail to comply with applicable laws.
Ferguson rejected the idea that AI agents should be treated as independent actors operating beyond human control. Instead, he indicated that regulators will examine the instructions, permissions, and oversight established by the companies developing and deploying these technologies.
He noted that internal investigations into alleged AI misconduct frequently reveal that the software was operating within the parameters, prompts, and access permissions established by its creators and operators.
The FTC’s position suggests that existing legal authority may be sufficient to hold businesses accountable for AI-related conduct without requiring entirely new regulations.
As AI agents move beyond basic customer service functions and begin handling transactions, processing payments, modifying account information, and issuing refunds, businesses will need to maintain clear records of how these systems operate.
Regulatory examinations may increasingly focus on governance policies, user permissions, system instructions, and activity logs rather than accepting the explanation that an automated system acted independently.
Steps Businesses Can Take to Prepare
As state and federal regulators continue evaluating AI-related risks, businesses should take proactive steps to understand how automated technologies are being used within their operations and ensure appropriate oversight is in place.
Consider the following practices:
- Inventory existing AI technology. Regularly identify and review the use of chatbots, voice agents, automated messaging systems, and other AI-powered tools throughout the organization.
- Establish clear accountability. Document who is responsible for each AI system, including the individuals overseeing its development, implementation, monitoring, and ongoing use.
- Ensure transparency. Confirm that automated tools accurately identify themselves and never imply that a human representative, attorney, or licensed professional is involved when one is not.
- Maintain appropriate licensing oversight. Review activities that require a licensed or registered individual under California law and ensure those responsibilities remain with the appropriately qualified person.
- Evaluate AI vendors. Understand how third-party providers test their technology, monitor system performance, address complaints, and safeguard consumer information.
- Document governance procedures. Maintain clear records of AI policies, system instructions, access permissions, monitoring practices, and oversight responsibilities.
- Prepare for regulatory inquiries. Develop a concise and accurate explanation of the organization’s AI governance practices so the information is readily available if requested during an examination or regulatory inquiry.
Artificial intelligence continues to create new opportunities for businesses
But Ai’s growing role in consumer interactions and financial transactions is also attracting increased regulatory attention.
With California emphasizing AI oversight and federal regulators reinforcing corporate accountability, businesses should not wait for additional regulations before evaluating their existing practices.
Establishing clear governance, maintaining documentation, and ensuring human accountability can help organizations prepare for an evolving regulatory environment while reducing the potential for consumer harm.
Author: Jennifer Evancic
Jennifer.Evancic@ResourceManagement.com
Jennifer Evancic is a third-party auditor valued by creditors and large organizations for her knowledge in call monitoring within the collections industry. With meticulous attention to detail and a firm grasp of regulatory requirements, she ensures compliance with clients’ criteria and state and federal regulations.
Jennifer audits collections calls, ensuring they meet client-specific criteria and comply with regulations, providing valuable insights and maintaining industry standards.
Beyond her auditing responsibilities, Jennifer takes the lead in organizing and facilitating monthly call calibrations. These sessions serve as a collaborative forum where clients and their vendors come together to discuss call monitoring results and address any findings or areas for improvement. Jennifer’s guidance fosters open communication and ensures alignment between clients and vendors, driving continuous improvement in collections practices.
Jennifer stays up-to-date with compliance and industry best practices by participating regularly in peer meetings, regulatory updates and industry webinars. This keeps her informed about emerging issues and ensures she remains a knowledgeable leader in collections compliance.
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