LOS ANGELES/WASHINGTON — When the US state of New Jersey lifted a coronavirus disease 2019 (COVID-19) ban on foreclosures last year, court officials hatched a plan to handle the incoming influx of cases: train a chatbot to respond to queries.

The program — nicknamed JIA — is one of a number of bots being rolled out by US justice systems, with advocates saying they improve access to services while critics warn automation opens the door for errors, bias, and privacy violations.

“The benefit of the chatbot is you teach it once and it knows the answer,” said Jack McCarthy, chief information officer of the New Jersey court system.

“With a help desk or staff, you tell one person and now you’ve got to train every other staff member.”

The trend towards such chatbots could accelerate in the near future — the US Department of Justice (DoJ) last month closed a public call asking for examples of “successful implementation” of the technology in criminal justice settings.

“It raises a flag that the DoJ is going to move towards funding more automation,” said Ben Winters, a lawyer with the rights group the Electronic Privacy Information Center (EPIC), which submitted a cautionary comment to the DoJ.

It urged the government to study the “very limited utility of chatbots, the potential dangers of over-reliance, and collateral consequences of widespread adoption.”

The National Institute of Justice (NIJ), the DoJ’s research arm, said it is simply gathering data in an effort to respond to developments in the criminal justice space and create “informative content” on emerging tech issues.

A 2021 NIJ report identified four kinds of criminal justice chatbots: those used by police, court systems, jails and prisons, and victim services.

So far, most function as glorified menus that do not use artificial intelligence (AI).

But the report predicts that much more advanced chatbots, including those that measure emotions and mimic empathy, are likely to be introduced into the criminal justice system.

JIA, for its part, was trained using machine learning from court documents and can handle 20,000 variants of questions and answers, from queries over wiping criminal records to child custody rules.

Its developers are trying to build more tailored services, allowing people to ask for personal information such as their court date.

But it is not involved in making any decisions or arbitration — “a thick line” that the courts system does not intend to cross, said Sivakumar Appavoo, a program manager working on AI and robotic automation.

HIGH STAKES
Snorri Ogata, the chief information officer of Los Angeles courts, said his staff tried to build a JIA-style chatbot, trained using years of data from live agents handling questions about jury selection.

But the system struggled to give accurate answers and was often confused by queries, he said. So the court settled on a series of simpler menus that do not allow open-ended questions.

“In justice and in courts, the stakes are higher, and we were stressed about directing people incorrectly,” he said.

Last year, the Identity Theft Resource Center — a nonprofit that helps victims of identity theft — tried to train a chatbot to respond to victims outside working hours, when staff was not available.

But the system — supported by DoJ funding — was unable to provide consistently accurate information, or respond with appropriate nuance, said Mona Terry, the chief victims officer.

In particular, it could not adapt to new identity theft schemes that cropped up during the COVID-19 pandemic, which produced new jargon and inquiries the system had not been trained for.

“There’s so much subtlety and emotion that goes into it — I’m not sure a chatbot could take that over,” Ms. Terry said.

Emily Bender, a professor at the University of Washington who studies ethical issues in automated language models, said carefully built interfaces to help citizens interact with government documents can be empowering.

But trying to build chatbots that mimic human interaction in a criminal justice context carries significant risks, she said.

“We have to keep in mind that anyone interacting with the justice system is in a vulnerable position,” Ms. Bender told the Thomson Reuters Foundation.

Chatbots should not be relied upon to give time-sensitive advice to those at risk, she said, while systems also need to have strong privacy protections and offer people a way to opt out so they can avoid unwanted data collection. 

The DoJ did not immediately respond to a comment request.

The 2021 government chatbot report noted “numerous benefits to implementing chatbots,” including efficiency and increasing access to services, while also laying out risks stemming from biased data-sets, incorrect responses, and privacy implications.

EPIC, the digital rights group, urged the government to nudge the emerging market to produce bots that are transparent over their algorithms and respect user privacy.

It has called on the DoJ to step up regulation in the space, from requiring bot licenses to holding regular audits and impact assessments to hold creators accountable.

Albert Fox Cahn, the founder of the Surveillance Technology Oversight Project, said it is unclear why the DoJ should be encouraging automation at all.

“We don’t want AI serving as gatekeepers for access to the justice system,” he said.

But more and more advanced tools are already being deployed elsewhere.

Andrew Wilkins, the co-founder of British startup Futr, said the firm has already built bots for police to handle crime reports, from domestic abuse to COVID-19 rules violations.

“There was a hesitancy about ‘what if it gets (the answer) wrong,’” he said, but those concerns were overcome by making sure humans were closely overseeing the bots’ interactions and looped in to answer escalating inquiries.

The company is rolling out analysis to try to detect the emotional tone of its chatbots’ conversations, and developing services that work not only on police websites, but also on WhatsApp and Facebook, he said.

“It’s a way to democratize access to services,” he said.

But for Fox Cahn, such tools are too risky to be relied on.

“For me, it’s pretty simple: just don’t build the damn thing,” he said. — Reuters

WASHINGTON — On Tuesday, bitcoin fell briefly below $30,000 for the first time in 10 months, while cryptocurrencies overall have lost nearly $800 billion in market value in the past month, according to data site CoinMarketCap, as investors fret about tightening monetary policy.

Compared with the Fed’s last tightening cycle which began in 2016 crypto is a much bigger market, raising concerns about its interconnectivity with the rest of the financial system.

HOW BIG IS THE CRYPTOCURRENCY MARKET?
In November, the most popular cryptocurrency, bitcoin, hit an all-time high of more than $68,000, pushing the value of the crypto market to $3 trillion, according to CoinGecko. That figure was $1.51 trillion on Tuesday.

Bitcoin accounts for nearly $600 billion of that value, followed by ethereum, with a $285-billion market cap.

Although cryptocurrencies have enjoyed explosive growth, the market is still relatively small.

The US equity markets, for example, are worth $49 trillion while the Securities Industry and Financial Markets Association has pegged the outstanding value of US fixed income markets at $52.9 trillion as of the end of 2021.

WHO OWNS AND TRADES CRYPTOCURRENCIES?
Cryptocurrency started out as a retail phenomenon, but institutional interest from exchanges, companies, banks, hedge funds and mutual funds is growing fast.

While data on the proportion of retail versus institutional investors in the crypto market are hard to come by, Coinbase, the world’s largest cryptocurrency exchange, said institutional and retail investors each accounted for about 50% of the assets on its platform in the fourth quarter.

Its institutional clients traded $1.14 trillion in crypto in 2021, up from just $120 billion in 2020, Coinbase said.

Most of the bitcoin and ethereum in circulation is held by a select few. An October report from the National Bureau of Economic Research (NBER) found that 10,000 bitcoin investors, both individuals and entities, control about one-third of the bitcoin market, and 1,000 investors own approximately 3 million bitcoin tokens.

Approximately 14% of Americans were invested in digital assets as of 2021, according to University of Chicago research.

COULD A CRYPTO CRASH HURT THE FINANCIAL SYSTEM?
While the overall crypto market is relatively small, the US Federal Reserve, Treasury Department and the international Financial Stability Board have flagged stablecoins — digital tokens pegged to the value of traditional assets — as a potential threat to financial stability.

Stablecoins are mostly used to facilitate trading in other digital assets. They are backed by assets that can lose value or become illiquid in times of market stress, while the rules and disclosures surrounding those assets and investors’ redemption rights are murky.

That could make stablecoins susceptible to a loss of investor confidence, particularly in times of market stress, regulators have said.

That happened on Monday, when TerraUSD, a major stablecoin, broke its 1:1 peg to the dollar and fell as low as $0.67, according to CoinGecko. That move partly contributed to bitcoin’s fall.

Although TerraUSD maintains its tie to the dollar through an algorithm, investor runs on stablecoins that maintain reserves in assets like cash or commercial paper could spill over into the traditional financial system, causing stress in those underlying asset classes, say regulators.

With more companies’ fortunes tied to the performance of crypto assets and traditional financial institutions dabbling more in the asset class, other risks are emerging, say regulators. In March, for example, the Acting Comptroller of the Currency warned that banks could be tripped up by crypto derivatives and unhedged crypto exposures, given they are working with little historical price data.

Still, regulators overall are divided on the size of the threat a crypto crash poses to the financial system and broader economy. — Reuters