# California AG legal advisory on AI (Jan 2025): Legal Advisory: Application of Existing California Laws to Artificial Intelligence

Source: https://www.bankingnewsai.com/ai-regulation/documents/ca-ag-legal-advisory-ai-2025
Last updated: Sep 1, 2026

On January 13, 2025 Attorney General Rob Bonta issued a legal advisory stating that California's existing laws already govern the development and use of AI. It maps the Unfair Competition Law (Bus. & Prof. Code §17200), the False Advertising Law (§17500), the CCPA (Civ. Code §1798.100 et seq.), the Unruh Civil Rights Act (Civ. Code §51), the Fair Employment and Housing Act (Gov. Code §12900 et seq.) and the Consumer Credit Reporting Agencies Act (Civ. Code §1785.1 et seq.) onto AI uses, and names AI used to evaluate credit risk and guide loan decisions among the uses that must still produce specific reasons for adverse actions. A companion advisory the same day addressed AI in health care.

## At a glance

| Field | Value |
| --- | --- |
| Authority | [State of California](https://www.bankingnewsai.com/ai-regulation/california) |
| Type | Guidance |
| Status | Final |
| Published | Jan 13, 2025 |
| Applies to | Any entity that develops, sells or uses AI systems affecting Californians — expressly including businesses using AI 'to evaluate consumers' credit risk and guide loan decisions' |
| Official text | https://oag.ca.gov/system/files/attachments/press-docs/Legal%20Advisory%20-%20Application%20of%20Existing%20CA%20Laws%20to%20Artificial%20Intelligence.pdf |

## Key points

- Names credit and lending directly: 'Businesses are using AI systems to evaluate consumers' credit risk and guide loan decisions, screen tenants for rentals, and target consumers with ads and offers'
- Adverse-action reasons: cites the federal Fair Credit Reporting Act and Equal Credit Opportunity Act and the California Consumer Credit Reporting Agencies Act as requiring specific reasons 'including when AI was used to make the determination'
- Treats undisclosed or deceptive AI use, unsubstantiated performance claims and AI-driven pricing or eligibility discrimination as potential UCL, FAL, Unruh or FEHA violations
- Applies the CCPA's purpose-limitation, transparency and consumer-rights provisions to AI training and profiling, and reminds businesses that AI-generated personal information is personal information
- The CFPB circular it relies on for the adverse-action point (Circular 2023-03) was withdrawn by the Bureau on May 12, 2025 — the statutory duty under ECOA/Reg B and FCRA is unaffected, and the state-law analysis stands

## What changed for banks

The advisory is the clearest statement by a state enforcer that lenders' AI is already regulated under general law, independent of any AI-specific statute. It gives the Attorney General a stated theory for UCL and Unruh actions against discriminatory or opaque credit models, and it matters more since the CFPB's 2025 withdrawal of its AI circulars and 2026 removal of ECOA disparate-impact liability moved the fair-lending frontier to the states.

## Use cases it governs

- [Fair lending & discrimination](https://www.bankingnewsai.com/ai-regulation/by-use-case#fair-lending)
- [Credit scoring & underwriting](https://www.bankingnewsai.com/ai-regulation/by-use-case#credit-underwriting)
- [Customer-facing chatbots](https://www.bankingnewsai.com/ai-regulation/by-use-case#customer-chatbots)
- [Data & privacy](https://www.bankingnewsai.com/ai-regulation/by-use-case#data-privacy)
- [AI governance (general)](https://www.bankingnewsai.com/ai-regulation/by-use-case#governance-general)

## FAQ

### Is the California AG advisory binding?

It is an interpretation, not a rule — but it states how the Attorney General will apply binding statutes (UCL, FAL, CCPA, Unruh, FEHA, CCRAA) to AI, and those statutes are enforceable by the AG, district attorneys and, for several, private plaintiffs.

### What does the advisory say about credit decisions?

That businesses using AI to evaluate credit risk or guide loan decisions must still provide specific reasons for adverse actions under FCRA, ECOA and the California Consumer Credit Reporting Agencies Act, and that discriminatory outcomes can violate Unruh and the UCL.

## Related documents

- [SB 947](https://www.bankingnewsai.com/ai-regulation/documents/ca-sb-947-2026) — Employment: Automated Decision Systems (No Robo Bosses Act) (Sep 30, 2026)
- [AB 1609](https://www.bankingnewsai.com/ai-regulation/documents/ca-ab-1609-2026) — Customer Service Chatbots (Right to Human Customer Service Act) (Sep 28, 2026)
- [California SB 53 (Transparency in Frontier AI Act)](https://www.bankingnewsai.com/ai-regulation/documents/ca-sb-53-2025) — Senate Bill 53: Artificial intelligence models: large developers (Transparency in Frontier Artificial Intelligence Act), Chapter 138, Statutes of 2025 (Sep 29, 2025)
- [CPPA ADMT, risk-assessment and cybersecurity-audit regulations](https://www.bankingnewsai.com/ai-regulation/documents/ca-cppa-admt-risk-cyber-regulations-2025) — CCPA Updates, Cybersecurity Audits, Risk Assessments, Automated Decisionmaking Technology, and Insurance Companies — approved regulation text (11 CCR Division 6) (Sep 22, 2025)
- [Civil Rights Council ADS employment regulations](https://www.bankingnewsai.com/ai-regulation/documents/ca-crc-ads-employment-regulations-2025) — Modifications to Employment Regulations Regarding Automated-Decision Systems (Fair Employment and Housing Act regulations, 2 CCR) (Jun 27, 2025)
- [Cal. Civ. Code §1798.145 (CCPA exemptions, incl. GLBA data)](https://www.bankingnewsai.com/ai-regulation/documents/ca-civil-code-1798-145) — California Consumer Privacy Act — exemptions, including the data-level exemption for information subject to the Gramm-Leach-Bliley Act and the California Financial Information Privacy Act (Civil Code §1798.145) (Jun 28, 2018)
- [MAS Guidelines on Artificial Intelligence Risk Management](https://www.bankingnewsai.com/ai-regulation/documents/mas-guidelines-ai-risk-management-2026) — Guidelines on Artificial Intelligence Risk Management for Financial Institutions (Oct 7, 2026)
- [Colorado AG proposed ADMT rules](https://www.bankingnewsai.com/ai-regulation/documents/co-ag-admt-proposed-rules-2026) — Proposed Automated Decision-Making Technology and Conversational AI Service Rules (Notice of Rulemaking Hearing) (Aug 11, 2026)

Last reviewed Sep 1, 2026. Cite the official text (https://oag.ca.gov/system/files/attachments/press-docs/Legal%20Advisory%20-%20Application%20of%20Existing%20CA%20Laws%20to%20Artificial%20Intelligence.pdf) for the rule and this page for the summary and dates.

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