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EXPLANATION: CAPITALS INDICATE MATTER ADDED TO EXISTING LAW.
[Brackets] indicate matter deleted from existing law.
*hb1399*
HOUSE BILL 1399
I3, I4 6lr2986
By: Delegate Hill
Introduced and read first time: February 13, 2026
Assigned to: Economic Matters
A BILL ENTITLED
AN ACT concerning 1
Consumer Protection – Consumer Reporting Agencies – Use of Algorithmic 2
Systems 3
FOR the purpose of establishing requirements for consumer reporting agencies that use 4
algorithmic systems to assemble or evaluate consumer credit information on 5
consumers for the purpose of furnishing consumer reports to third parties; requiring 6
the Commissioner of Financial Regulation of the Maryland Department of Labor to 7
establish certain assessment thresholds for algorithms, mandate regular training for 8
human reviewers, and implement a certain whistleblower protection program; and 9
generally relating to consumer reporting agencies and algorithmic systems. 10
BY repealing and reenacting, without amendments, 11
Article – Commercial Law 12
Section 14–1201(a) and (c) through (f) 13
Annotated Code of Maryland 14
(2025 Replacement Volume) 15
BY adding to 16
Article – Commercial Law 17
Section 14–1228 18
Annotated Code of Maryland 19
(2025 Replacement Volume) 20
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 21
That the Laws of Maryland read as follows: 22
Article – Commercial Law 23
14–1201. 24
(a) In this subtitle the following words have the meanings indicated. 25
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(c) “Commissioner” means the Commissioner of Financial Regulation of the 1
Maryland Department of Labor. 2
(d) “Consumer” means an individual. 3
(e) (1) “Consumer report” means any written, oral, or other communication of 4
any information by a consumer reporting agency bearing on a consumer’s credit worthiness, 5
credit standing, credit capacity, character, general reputation, personal characteristics, or 6
mode of living which is used or expected to be used or collected in whole or in part for the 7
purpose of serving as a factor in establishing the consumer’s eligibility for: 8
(i) Credit or insurance to be used primarily for personal, family, or 9
household purposes; 10
(ii) Employment purposes; or 11
(iii) Other purposes authorized under § 14–1202 of this subtitle. 12
(2) The term does not include: 13
(i) Any report containing information solely as to transactions or 14
experiences between the consumer and the person making the report; 15
(ii) Any authorization or approval of a specific extension of credit 16
directly or indirectly by the issuer of a credit card or similar device; or 17
(iii) Any report in which a person who has been requested by a third 18
party to make a specific extension of credit directly or indirectly to a consumer conveys his 19
decision with respect to the request, if the third party advises the consumer of the name 20
and address of the person to whom the r equest was made and the person makes the 21
disclosures to the consumer required under § 14–1212 of this subtitle. 22
(f) (1) “Consumer reporting agency” means any person which, for monetary 23
fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in part in the 24
practice of assembling or evaluating consumer credit information or other information on 25
consumers for the purpose of furnishing consumer reports to third parties, and which uses 26
any means or facility of commerce for the purpose of preparing or furnishing consumer 27
reports. 28
(2) “Consumer reporting agency” does not include: 29
(i) A person licensed as a private detective agency or certified as a 30
private detective under the Maryland Private Detectives Act; or 31
(ii) A person who assembles and exchanges consumer credit 32
information with an affiliated person or a person who is owned or controlled by the same 33
HOUSE BILL 1399 3
entity, provided that, in the event of an adverse credit decision against a consumer based 1
on that information, the entity maki ng the decision shall comply with the notice 2
requirements of § 14–1212(b) of this subtitle. 3
14–1228. 4
(A) THIS SECTION APPLIES ONLY TO A CONSUMER R EPORTING AGENCY 5
THAT USES ALGORITHMIC SYSTEMS TO ASSEMBLE OR EVALUATE CONSUMER CREDIT 6
INFORMATION OR OTHER INFORMATION ON CONSU MERS FOR THE PURPOSE OF 7
FURNISHING CONSUMER REPORTS TO THIRD PARTIES. 8
(B) A CONSUMER REPORTING AGENCY SUBJECT TO THIS SECTION SHALL: 9
(1) BE ABLE TO PROVIDE AN EXPLANATION OF EACH EVALUATION 10
MADE BY AN ALGORITHM IC SYSTEM IN PLAIN L ANGUAGE THAT MEETS , AT A 11
MINIMUM, AN 8.0 ON THE FLESCH–KINCAID READABILITY TESTS; 12
(2) MAINTAIN A PUBLIC REG ISTRY OF ALL ALGORIT HMS USED 13
INCLUDING THEIR PURPOSE, DATA SOURCES, AND GENERAL METHODOLOGY; 14
(3) MAINTAIN: 15
(I) AN OVERALL ERROR RATE FOR ALGORITHMIC 16
EVALUATIONS OF LESS THAN 0.5% WHEN COMPARED TO HUMAN REVIEW; 17
(II) DISCRIMINATORY DATA R ATES BASED ON PROTEC TED 18
CHARACTERISTICS OF LESS THAN 0.1%; AND 19
(III) ACCURACY OF DATA INPUTS AT A RATE OF AT LEAST 99.9%; 20
(4) PROCURE QUARTERLY HA RMFUL BIAS AUDITS BY AN 21
INDEPENDENT THIRD –PARTY ORGANIZATION T HAT INCLUDE ERROR RA TES AND 22
HARMFUL BIAS ASSESSMENTS AND SUBMIT TO THE COMMISSIONER: 23
(I) EACH QUARTERLY AUDIT WITHIN 30 DAYS AFTER 24
COMPLETION; AND 25
(II) ANNUAL REPORTS SUMMAR IZING THE QUA RTERLY AUDIT 26
RESULTS AND ALGORITHMIC PERFORMANCE; 27
(5) IMPLEMENT A DATA GOVERNANCE FRAMEWORK THAT: 28
(I) CERTIFIES DATA SOURCE S FOR ACCURACY AND 29
RELEVANCE WITH UPDATES AT LEAST MONTHLY; 30
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(II) TRACKS DATA LINEAGE A ND ESTABLISHES QUALI TY 1
CONTROL MEASURES; AND 2
(III) INCLUDES MINIMUM DATA SET SIZE REQUIREMENT S TO 3
ENSURE STATISTICAL SIGNIFICANCE IN ALGORITHMIC EVALUATIONS, INCLUDING: 4
1. FOR SIMPLE ALGORITHMS WITH FEW VARIABLES, AT 5
LEAST 1,000 DATA POINTS PER CATEGORY OR SUBGROUP ANALYZED; 6
2. FOR MORE COMPLEX ALGO RITHMS OR THOSE 7
INVOLVING MULTIPLE VARIABLES, AT LEAST 5,000 DATA POINTS PER CATEGORY OR 8
SUBGROUP ANALYZED; AND 9
3. FOR HIGHLY COMPLEX MODELS OR WHEN DETECTING 10
SMALL EFFECTS , AT LEAST 10,000 DATA POINTS PER CATE GORY OR SUBGROUP 11
ANALYZED; 12
(6) BEFORE A DECISION IS FINAL, REQUIRE ALL AUTOMATED 13
EVALUATIONS TO: 14
(I) BE SUBJECT TO HUMAN R EVIEW WITHIN 24 HOURS AFTER 15
THE EVALUATION; AND 16
(II) ALLOW FOR AN EXPEDITE D REVIEW PROCESS INC LUDING 17
HUMAN REVIEW WITHIN 48 HOURS AFTER THE REVIEW REQUEST BEING SUBMITTED; 18
(7) REQUIRE AT LEAST 10% OF ALL ALGORITHMIC EVALUATIONS TO 19
UNDERGO RANDOM HUMAN REVIEW TO PREVENT FALSE POSITIVES; 20
(8) DESIGNATE STAFF TO BE RESPONSIBLE FOR COMP LIANCE WITH 21
THIS SECTION; 22
(9) IMPLEMENT A SYSTEM TO IMPROVE ALGORITHMIC 23
PERFORMANCE BASED ON REVIEW OUTCOMES AND HUMAN EXPERT INPUT; 24
(10) PROVIDE ALTERNATIVE , NONALGORITHMIC ASSES SMENT 25
OPTIONS FOR CONSUMERS WHO OPT OUT OF AUTOMATED DECISION MAKING; AND 26
(11) MAINTAIN A CONTINGENCY PLAN FOR SYSTEM FAILURES OR DATA 27
BREACHES THAT COULD COMPROMISE ALGORITHMIC INTEGRITY. 28
(C) A CONSUMER REPORTING AGENCY SHALL: 29
HOUSE BILL 1399 5
(1) PROVIDE NOTICE THAT ARTIFICIAL INTE LLIGENCE IS BEING 1
USED DURING AN EVALUATION; AND 2
(2) ENSURE THAT ARTIFICIA L INTELLIGENCE SYSTEM OUTPUTS, 3
INCLUDING ANY SYNTHETIC AUDIO, IMAGE, VIDEO, OR TEXT, ARE DETECTABLE AS 4
ARTIFICIALLY GENERATED. 5
(D) THE COMMISSIONER SHALL: 6
(1) ESTABLISH ANNUAL ASSE SSMENT THRESHOLDS FO R 7
ALGORITHMS TO ENSURE THEY REMAIN APPROPRIATE AS TECHNOLOGY EVOLVES; 8
(2) MANDATE REGULAR TRAIN ING FOR HUMAN REVIEW ERS ON 9
ALGORITHM FUNCTIONALITY AND POTENTIAL HARMFUL BIAS; AND 10
(3) IMPLEMENT A WHISTLEBL OWER PROTECTION PROG RAM FOR 11
EMPLOYEES WHO REPORT ALGORITHMIC MISUSE OR NONCOMPLIANCE. 12
(E) THE COMMISSIONER MAY ADOP T REGUL ATIONS TO CARRY OUT THE 13
PROVISIONS OF THIS SECTION. 14
SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect 15
October 1, 2026. 16