WHAT THIS BILL REGULATES · 2 REQUIREMENT TYPES
How Is This Bill Enforced
Verbatim statutory text on the left; plain-language analysis and a per-section checklist on the right. Numbered markers cross-link to the matching checklist row.
1 The Legislature finds and declares that: a. Automated and algorithmic decision-making systems, including artificial intelligence and predictive analytics, are increasingly used in mortgage lending, credit underwriting, tenant screening, rental pricing, and real estate related financial determinations. b. These systems, while often facially neutral, may replicate or amplify discriminatory outcomes, including disparate impactsDisparate impact"Disparate impact" means the result of a policy or practice that actually or predictably results in a disproportionately negative effect on members of a protected class.Section 2 on protected classesProtected class"Protected class" means an employee who has one or more characteristics, including race, creed, color, national origin, nationality, ancestry, age, marital status, civil union status, domestic partnership status, affectional or sexual orientation, genetic information, pregnancy, sex, gender identity or expression, disability, or atypical hereditary cellular or blood trait of any individual, or liability for service in the armed forces, for which subsection f, g, h, i, or k of section 11 of P.L.1945, c.169 (C.10:5-12) prohibits discrimination.Section 2, through data selection, proxy variables, model structure, or deployment practices. c. The "Law Against Discrimination," P.L.1945, c.169 (C.10:5-1 et seq.), prohibits discrimination against protected classesProtected class"Protected class" means an employee who has one or more characteristics, including race, creed, color, national origin, nationality, ancestry, age, marital status, civil union status, domestic partnership status, affectional or sexual orientation, genetic information, pregnancy, sex, gender identity or expression, disability, or atypical hereditary cellular or blood trait of any individual, or liability for service in the armed forces, for which subsection f, g, h, i, or k of section 11 of P.L.1945, c.169 (C.10:5-12) prohibits discrimination.Section 2 in housing and lending industries in the State. d. The New Jersey Office of the Attorney General recognized disparate impactDisparate impact"Disparate impact" means the result of a policy or practice that actually or predictably results in a disproportionately negative effect on members of a protected class.Section 2 discrimination in the housing and lending spaces in N.J.A.C.13:16-1.1, et seq. e. Recent federal actions have reduced or eliminated disparate impactDisparate impact"Disparate impact" means the result of a policy or practice that actually or predictably results in a disproportionately negative effect on members of a protected class.Section 2 enforcement under federal housing and credit laws, increasing the importance of State-level protections. f. The Legislature therefore determines that it is in the public interest to regulate the use of automated decision making in these areas to: (1) ensure transparency, accountability, and fairness in the use of automated systems affecting access to housing and credit; (2) clarify the application of existing State civil-rights law to automated systems; and (3) preserve innovation while preventing discriminatory outcomes prohibited under State law.
Section 1 sets out the Legislature's factual findings and policy rationale. It identifies the growing use of automated and algorithmic decision-making in mortgage lending, credit underwriting, tenant screening, rental pricing, and real estate financial determinations, and acknowledges these systems may replicate or amplify discriminatory outcomes through data selection, proxy variables, model structure, or deployment practices. The Legislature expressly responds to recent federal reductions in disparate impact enforcement, positioning the bill as a State-level gap-filler to ensure transparency, accountability, and fairness while preserving innovation.
As used in this act: "Automated decision systemAutomated decision system"Automated decision system" means a computational process, including one derived from machine learning, artificial intelligence, statistical modeling, or data analytics, that is used in whole or in part, to deny, approve, price, rank, or condition access to housing, mortgage credit, rental housing, or related financial services affecting a natural person.Section 2" means a computational process, including one derived from machine learning, artificial intelligence, statistical modeling, or data analytics, that is used in whole or in part, to deny, approve, price, rank, or condition access to housing, mortgage credit, rental housing, or related financial services affecting a natural person. "Covered entityCovered entity"Covered entity" means a person, lender, housing provider, screening company, creditor, servicer, insurer, or agent that uses or deploys an automated decision system in connection with a housing‑related or credit‑related decision concerning a person in the State.Section 2" means a person, lender, housing provider, screening company, creditor, servicer, insurer, or agent that uses or deploys an automated decision systemAutomated decision system"Automated decision system" means a computational process, including one derived from machine learning, artificial intelligence, statistical modeling, or data analytics, that is used in whole or in part, to deny, approve, price, rank, or condition access to housing, mortgage credit, rental housing, or related financial services affecting a natural person.Section 2 in connection with a housing‑related or credit‑related decision concerning a person in the State. "Disparate impactDisparate impact"Disparate impact" means the result of a policy or practice that actually or predictably results in a disproportionately negative effect on members of a protected class.Section 2" means the result of a policy or practice that actually or predictably results in a disproportionately negative effect on members of a protected classProtected class"Protected class" means an employee who has one or more characteristics, including race, creed, color, national origin, nationality, ancestry, age, marital status, civil union status, domestic partnership status, affectional or sexual orientation, genetic information, pregnancy, sex, gender identity or expression, disability, or atypical hereditary cellular or blood trait of any individual, or liability for service in the armed forces, for which subsection f, g, h, i, or k of section 11 of P.L.1945, c.169 (C.10:5-12) prohibits discrimination.Section 2. "Protected classProtected class"Protected class" means an employee who has one or more characteristics, including race, creed, color, national origin, nationality, ancestry, age, marital status, civil union status, domestic partnership status, affectional or sexual orientation, genetic information, pregnancy, sex, gender identity or expression, disability, or atypical hereditary cellular or blood trait of any individual, or liability for service in the armed forces, for which subsection f, g, h, i, or k of section 11 of P.L.1945, c.169 (C.10:5-12) prohibits discrimination.Section 2" means an employee who has one or more characteristics, including race, creed, color, national origin, nationality, ancestry, age, marital status, civil union status, domestic partnership status, affectional or sexual orientation, genetic information, pregnancy, sex, gender identity or expression, disability, or atypical hereditary cellular or blood trait of any individual, or liability for service in the armed forces, for which subsection f, g, h, i, or k of section 11 of P.L.1945, c.169 (C.10:5-12) prohibits discrimination.
Section 2 defines the four key terms used throughout the act. Automated decision system is broadly defined to include any computational process — machine learning, AI, statistical modeling, or data analytics — used in whole or in part to deny, approve, price, rank, or condition access to housing, mortgage credit, rental housing, or related financial services. Covered entity sweeps broadly across lenders, housing providers, screening companies, creditors, servicers, insurers, and their agents. Protected class incorporates the full list of characteristics protected under the New Jersey Law Against Discrimination.
(a) 1 A covered entityCovered entity"Covered entity" means a person, lender, housing provider, screening company, creditor, servicer, insurer, or agent that uses or deploys an automated decision system in connection with a housing‑related or credit‑related decision concerning a person in the State.Section 2 or a covered entityCovered entity"Covered entity" means a person, lender, housing provider, screening company, creditor, servicer, insurer, or agent that uses or deploys an automated decision system in connection with a housing‑related or credit‑related decision concerning a person in the State.Section 2's agent, third-party vendor, model developer, or external data source shall not use an automated decision systemAutomated decision system"Automated decision system" means a computational process, including one derived from machine learning, artificial intelligence, statistical modeling, or data analytics, that is used in whole or in part, to deny, approve, price, rank, or condition access to housing, mortgage credit, rental housing, or related financial services affecting a natural person.Section 2 in a manner that results in a disparate impactDisparate impact"Disparate impact" means the result of a policy or practice that actually or predictably results in a disproportionately negative effect on members of a protected class.Section 2 on a protected classProtected class"Protected class" means an employee who has one or more characteristics, including race, creed, color, national origin, nationality, ancestry, age, marital status, civil union status, domestic partnership status, affectional or sexual orientation, genetic information, pregnancy, sex, gender identity or expression, disability, or atypical hereditary cellular or blood trait of any individual, or liability for service in the armed forces, for which subsection f, g, h, i, or k of section 11 of P.L.1945, c.169 (C.10:5-12) prohibits discrimination.Section 2. Use of an automated decision systemAutomated decision system"Automated decision system" means a computational process, including one derived from machine learning, artificial intelligence, statistical modeling, or data analytics, that is used in whole or in part, to deny, approve, price, rank, or condition access to housing, mortgage credit, rental housing, or related financial services affecting a natural person.Section 2 in this manner shall constitute a violation of the "Law Against Discrimination," P.L.1945, c.169 (C.10:5-1 et seq.).
(b) 1 An individual aggrieved by a violation of this act may bring suit in Superior Court challenging a covered entityCovered entity"Covered entity" means a person, lender, housing provider, screening company, creditor, servicer, insurer, or agent that uses or deploys an automated decision system in connection with a housing‑related or credit‑related decision concerning a person in the State.Section 2 or a covered entityCovered entity"Covered entity" means a person, lender, housing provider, screening company, creditor, servicer, insurer, or agent that uses or deploys an automated decision system in connection with a housing‑related or credit‑related decision concerning a person in the State.Section 2's agent, third-party vendor, model developer, or external data source's use of an automated decision systemAutomated decision system"Automated decision system" means a computational process, including one derived from machine learning, artificial intelligence, statistical modeling, or data analytics, that is used in whole or in part, to deny, approve, price, rank, or condition access to housing, mortgage credit, rental housing, or related financial services affecting a natural person.Section 2, and shall demonstrate a violation by proving that the use of the automated decision systemAutomated decision system"Automated decision system" means a computational process, including one derived from machine learning, artificial intelligence, statistical modeling, or data analytics, that is used in whole or in part, to deny, approve, price, rank, or condition access to housing, mortgage credit, rental housing, or related financial services affecting a natural person.Section 2 results in a disparate impactDisparate impact"Disparate impact" means the result of a policy or practice that actually or predictably results in a disproportionately negative effect on members of a protected class.Section 2 on a protected classProtected class"Protected class" means an employee who has one or more characteristics, including race, creed, color, national origin, nationality, ancestry, age, marital status, civil union status, domestic partnership status, affectional or sexual orientation, genetic information, pregnancy, sex, gender identity or expression, disability, or atypical hereditary cellular or blood trait of any individual, or liability for service in the armed forces, for which subsection f, g, h, i, or k of section 11 of P.L.1945, c.169 (C.10:5-12) prohibits discrimination.Section 2.
(c) 1 A covered entityCovered entity"Covered entity" means a person, lender, housing provider, screening company, creditor, servicer, insurer, or agent that uses or deploys an automated decision system in connection with a housing‑related or credit‑related decision concerning a person in the State.Section 2 shall have an affirmative defense against liability by demonstrating that: (1) the challenged use is for a substantial, legitimate, nondiscriminatory purpose; and (2) no less discriminatory alternative practice or system is available that would serve that interest.
(d) 1 A covered entityCovered entity"Covered entity" means a person, lender, housing provider, screening company, creditor, servicer, insurer, or agent that uses or deploys an automated decision system in connection with a housing‑related or credit‑related decision concerning a person in the State.Section 2 is liable for the actions of its agent, third-party vendor, model developer, or external data source that is found to have used an automated decision systemAutomated decision system"Automated decision system" means a computational process, including one derived from machine learning, artificial intelligence, statistical modeling, or data analytics, that is used in whole or in part, to deny, approve, price, rank, or condition access to housing, mortgage credit, rental housing, or related financial services affecting a natural person.Section 2 in a manner that violates the provisions of this act.
Section 3 is the bill's substantive core. It prohibits covered entities — and extends liability to their agents, third-party vendors, model developers, and external data sources — from using an automated decision system in a manner that results in a disparate impact on a protected class. Any such use constitutes a violation of the New Jersey Law Against Discrimination. The section creates a private right of action in Superior Court for aggrieved individuals, who must prove the automated decision system's use results in a disparate impact.
The affirmative defense mirrors traditional disparate impact burden-shifting: the covered entity must demonstrate both a substantial, legitimate, nondiscriminatory purpose and the absence of any less discriminatory alternative. Vicarious liability is expressly imposed on covered entities for the actions of downstream vendors, model developers, and data sources.
(a) 2 A covered entityCovered entity"Covered entity" means a person, lender, housing provider, screening company, creditor, servicer, insurer, or agent that uses or deploys an automated decision system in connection with a housing‑related or credit‑related decision concerning a person in the State.Section 2 that uses an automated decision systemAutomated decision system"Automated decision system" means a computational process, including one derived from machine learning, artificial intelligence, statistical modeling, or data analytics, that is used in whole or in part, to deny, approve, price, rank, or condition access to housing, mortgage credit, rental housing, or related financial services affecting a natural person.Section 2 shall, at reasonable intervals and no less than once every two years, conduct an algorithmic impact assessment evaluating, in a form and manner as prescribed by the Director of the Division on Civil Rights in consultation with the Attorney General, whether use of the system results in a disparate impactDisparate impact"Disparate impact" means the result of a policy or practice that actually or predictably results in a disproportionately negative effect on members of a protected class.Section 2 on a protected classProtected class"Protected class" means an employee who has one or more characteristics, including race, creed, color, national origin, nationality, ancestry, age, marital status, civil union status, domestic partnership status, affectional or sexual orientation, genetic information, pregnancy, sex, gender identity or expression, disability, or atypical hereditary cellular or blood trait of any individual, or liability for service in the armed forces, for which subsection f, g, h, i, or k of section 11 of P.L.1945, c.169 (C.10:5-12) prohibits discrimination.Section 2.
(b) 3 A covered entityCovered entity"Covered entity" means a person, lender, housing provider, screening company, creditor, servicer, insurer, or agent that uses or deploys an automated decision system in connection with a housing‑related or credit‑related decision concerning a person in the State.Section 2 shall maintain a record of algorithmic impact assessments conducted pursuant to this section and make the record available to inspection by the Director of the Division on Civil Rights or the Attorney General upon request.
(c) Nothing in this section shall require disclosure of proprietary source code or trade secrets.
(d) The Division on Civil Rights or the Attorney General may impose a fine of not less than $5,000 on a covered entityCovered entity"Covered entity" means a person, lender, housing provider, screening company, creditor, servicer, insurer, or agent that uses or deploys an automated decision system in connection with a housing‑related or credit‑related decision concerning a person in the State.Section 2 who violates the provisions of this section.
Section 4 imposes a periodic algorithmic impact assessment obligation on covered entities. Assessments must be conducted at reasonable intervals and no less than once every two years, evaluating whether use of the automated decision system results in a disparate impact on a protected class. The form and manner of the assessment is to be prescribed by the Director of the Division on Civil Rights in consultation with the Attorney General.
Covered entities must retain assessment records and make them available to the Division on Civil Rights or the Attorney General upon request. A trade-secret carve-out protects proprietary source code from compelled disclosure. The Division or Attorney General may impose fines of not less than $5,000 for violations of the assessment requirements.
(a) 4 A covered entityCovered entity"Covered entity" means a person, lender, housing provider, screening company, creditor, servicer, insurer, or agent that uses or deploys an automated decision system in connection with a housing‑related or credit‑related decision concerning a person in the State.Section 2 shall provide clear notice to an individual when an automated decision systemAutomated decision system"Automated decision system" means a computational process, including one derived from machine learning, artificial intelligence, statistical modeling, or data analytics, that is used in whole or in part, to deny, approve, price, rank, or condition access to housing, mortgage credit, rental housing, or related financial services affecting a natural person.Section 2 is used in a housing or credit decision affecting that individual.
(b) 5 An individual adversely affected by a decision made by an automated decision systemAutomated decision system"Automated decision system" means a computational process, including one derived from machine learning, artificial intelligence, statistical modeling, or data analytics, that is used in whole or in part, to deny, approve, price, rank, or condition access to housing, mortgage credit, rental housing, or related financial services affecting a natural person.Section 2 shall have the right to request meaningful human review of the decision.
(c) The Division on Civil Rights or the Attorney General may impose a fine of not less than $5,000 on a covered entityCovered entity"Covered entity" means a person, lender, housing provider, screening company, creditor, servicer, insurer, or agent that uses or deploys an automated decision system in connection with a housing‑related or credit‑related decision concerning a person in the State.Section 2 that: (1) fails to provide requisite notice, pursuant to subsection a of this section, of the use of an automated decision systemAutomated decision system"Automated decision system" means a computational process, including one derived from machine learning, artificial intelligence, statistical modeling, or data analytics, that is used in whole or in part, to deny, approve, price, rank, or condition access to housing, mortgage credit, rental housing, or related financial services affecting a natural person.Section 2 in a housing or credit decision; or (2) denies meaningful human review of the decision when requested.
Section 5 imposes two distinct consumer-facing obligations. First, covered entities must provide clear notice to individuals when an automated decision system is used in a housing or credit decision affecting them. Second, individuals adversely affected by such a decision have the right to request meaningful human review. Fines of not less than $5,000 may be imposed by the Division on Civil Rights or the Attorney General for failures to provide notice or to honor human review requests.
(a) All rights, remedies, defenses, and procedures available under the "Law Against Discrimination," P.L.1945, c.169 (C.10:5-1 et seq.) shall apply to this act.
(b) In addition to any existing remedies or penalties provided for by law, a covered entityCovered entity"Covered entity" means a person, lender, housing provider, screening company, creditor, servicer, insurer, or agent that uses or deploys an automated decision system in connection with a housing‑related or credit‑related decision concerning a person in the State.Section 2 that violates the provisions of section 3 of this act shall be subject to the penalties provided pursuant to section 2 of P.L.1983, c.412 (C.10:5-14.1a), in an amount as determined by the director.
Section 6 incorporates by reference all rights, remedies, defenses, and procedures available under the Law Against Discrimination. Additionally, violations of the disparate impact prohibition in Section 3 are subject to penalties under C.10:5-14.1a as determined by the Director. This section creates no independent compliance obligation but expands the enforcement and remedial framework available to plaintiffs and regulators.
This act shall take effect 30 days after the date of enactment.
The act takes effect 30 days after the date of enactment.