Does the idea of AI support tools entering a contract or making an enforceable promise or sharing false or misleading information with consumers cause you to think twice as a business owner?
According to Brendan Bernicker, cofounder of Bernicker Law PLLC, a boutique law firm that advises technology startups and software developers in the U.S. and U.K., when it comes to AI speaking on behalf of businesses, these are things, among others, that business owners should be thinking about or be “a little worried about” because they all could potentially create legal liability for the company.
Bernicker, who spoke at the ABA-sponsored webinar “We Said What?! Companies' Liability for Statements by (and to) Their AI Customer Service Agents,” said businesses that use support tools like chatbot or other AI tools that interact with customers should learn how to weigh the legal consequences of “allowing AI to interact with your customers.” There are risks, he said.
Bernicker said it’s good to look at cases from other countries as well because “AI is inherently international. In the U.S. we have a traditional allergy to looking to the judgements of foreign courts, but it would be a real disservice in the AI area not to try to benefit from these sorts of reasoned judgements from legal colleagues in other countries.”
Moffat v. Air Canada was a 2024 case that was decided by the British Columbia Civil Resolution Tribunal. It found Air Canada liable for the negligent misrepresentation of its AI chatbot. The plaintiff Moffat’s grandmother passed away, and he asked the chatbot on Air Canada’s site about their bereavement policies and was told he could book his flight and ask for a refund if he did it within 90 days and he would get a bereavement discount afterwards.
In that response from the chatbot, there was a link to the actual policy with Air Canada that said the bereavement discount had to be approved in advance. So when he traveled and asked for a refund, he was denied. He sued in a small claims court. “That sort of teed up the first real decision on the question about when businesses are liable for statements by their AI agents,” Bernicker said. The holding was that Air Canada was liable, and therefore, the airline had to honor the discount.