Oct 26, 2024
Like many homeowners, Robert Brown purchased a home warranty to protect his finances against problems that might occur on his property. Naturally, when his air conditioner broke, he contacted his warranty company to get it repaired.
A technician was dispatched and able to get the unit up and running again, but told Brown it was only a temporary fix. The Draper, Utah, homeowner realized he would need to get a replacement, so he contacted the warranty company again and pleaded his case.
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Brown went online and was connected to the warranty company's chatbot, where he explained what had occurred.
"Can I just get the maximum payout of $3000.00?" he asked, according to KSL News in a story broadcast Sept. 23. "I will order and get it installed myself."
The chatbot agreed, per KSL News, stating: "We will proceed with the payout option of $3,000.00 as per your request.”
Brown says he was assured several times that the money was on its way. But when he called the company after the payment didn't come, he says the business told him the chatbot was "miscommunicating" with customers and they refused to pay.
"I said, 'How's that my fault?'" Brown recounted.
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Brown then contacted KSL News, which called the Utah Division of Consumer Protection.
Here's what happened next, along with details on the responsibilities of companies and their chatbots.
Risks of company chatbots
In response to Brown's predicament, the Utah Division of Consumer Protection made it clear that a company can't simply ignore agreements made by their AI software.
"A company is ultimately responsible for the things their representatives are saying," Katie Hass, the division’s director, told KSL News. “A robot can be a representative of a company.”
This type of scenario has played out before elsewhere. In February, Air Canada was ordered to compensate a grieving passenger who claimed in 2022 its chatbot misled them into purchasing tickets at full price up front instead of at the bereavement rate. Upon returning from their grandmother's funeral, the passenger was denied a refund they say the bot told them was available.
The Canadian airline argued, per tribunal member Christopher C. Rivers, that the online tool was "a separate legal entity that is responsible for its own actions" and pointed out that it had an accurate version of its bereavement travel policy on its website, which doesn't allow for refunds after travel is complete. Still, the tribunal wasn't moved, and the airline was said to be responsible for all information on its site, even if a robot had provided it.
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While the U.S. courts don't appear to have ruled on a similar case, the Federal Trade Commission and Consumer Financial Protection Bureau in June both issued warnings to businesses about the use of chatbots. Companies must realize the risks when using artificial intelligence when interacting with the public.
As for Brown, in the end, KSL News reports he got his $3,000 after the local broadcaster contacted the home warranty company. The company did not immediately respond to a request for comment.
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How to protect your rights
If you find yourself in a similar situation to Brown, make sure you capture all the details. Take screenshots of the conversation, as the Air Canada passenger did in their case, so you have a record of the conversation. And be careful about what you say to the chatbot, because if you appear to have engaged in fraudulent or underhanded behavior, this behavior may be used against you.
Filing a complaint with your area's consumer protection agency may be a good first step toward a resolution.
Keep in mind that this is an evolving area of the law, and companies may not always want to follow through if a chatbot makes an agreement with you. While you may ultimately prevail, in some cases, you might have to take legal action to do it — and there are no guarantees the law will be in your favor. The technology is too new for there to be established precedent.
If you have an expensive disagreement with a company based on a chatbot’s commitment, contacting a lawyer with experience in this emerging tech may be your best bet. In some cases, the business may decide to settle the matter rather than risk a ruling that doesn't go their way.
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Christy Bieber has 15 years of experience as a personal finance and legal writer. She has written for many publications including Forbes, Kilplinger, CNN, WSJ, Credit Karma, Insurify and more.
