New Chatbot Laws Emerging in U.S.

Of all the new AI applications on the market, the one most people are familiar with is the chatbot. Companies have deployed chatbots in a variety of functions, from customer service to healthcare. However, being the most popular AI offering to date, they have also caught the attention of lawmakers. So far, at least eight states have adopted new laws regulating chatbots. A recent Cooley memo discusses the substance of these laws:

“Several state laws seek to address a general consumer deception risk (e.g., failing to inform users that they are not communicating with a live human), while others focus on sector-specific use cases considered to warrant more narrow tailoring (e.g., AI mental health chatbots, chatbots interacting with children and AI-powered companions). All state chatbot laws currently in effect provide for civil monetary penalties on a per violation basis and are enforced by state regulatory authorities.”

The memo notes that California’s recently passed SB 243 is the first chatbot law to introduce a private right of action as an enforcement mechanism. Under SB 243, if a company violates chatbot restrictions and a user suffers an injury, then the user may sue the company directly. Any company that uses chatbots should review its practices and ensure compliance with emerging state frameworks. Even companies operating in states without chatbot laws should review their practices for proper disclosures. The memo raises the possibility that chatbots masquerading as human agents may be considered misleading under consumer protection statutes.