Starting a business with artificial intelligence (AI) might seem easier than ever, with some tools offering to run key functions “while you sleep” or build entire apps from a single prompt. However, this technology carries new risks and reshapes old ones.
According to the report, Australian law has well-established protections against misleading conduct, which still apply to businesses using AI tools. For instance, if an AI chatbot provides incorrect information, the business can be held liable, even if it didn’t intend to mislead, as seen in the case of an Air Canada customer assistance chatbot that provided incorrect information about bereavement fares.
Businesses are bound by their own contractual obligations to deliver what they promised on time, in the way they promised. If an AI pricing tool fails to provide a discount to some consumers, it would be considered misleading. Similarly, a chatbot that manipulates consumers’ emotional responses could fall foul of the existing ban on unconscionable conduct.
Many businesses use AI to create social media content, which can lead to inaccurate images or suggestions that the social media influencer promoting a product is human. They manage paperwork, quotes, and orders with AI, which can also pose risks, such as errors in pricing or misquoting products. These activities are still bound by law, including meeting Corporations Law obligations relating to reporting and governance.
The performance of AI needs to be overseen by a human with the right expertise to avoid costly mistakes. Agentic AI systems, which act with a high level of autonomy, can interact with external tools and databases to complete tasks, such as retail sales, managing merchandise distribution, and engaging in high-frequency crypto trading. However, if an agentic AI system messes up an order, the responsibility still lies with the party contractually obliged to deliver the product or service.
A business that rolls out an underperforming AI may suffer losses, including compensation to customers or fines from regulators. It may seek compensation from the developer or tech firm that supplied the AI product, but this is governed by the contracts between the parties, and statutory consumer law protections may also apply to business-to-business contracts.
However, if the business has tinkered with the underlying AI, responsibility for poor performance may sit squarely with that business. As AI becomes more prevalent in business operations, it’s essential to be mindful of the potential legal risks and responsibilities that come with it. Businesses must ensure they are aware of their obligations and take steps to mitigate any potential issues, much like business partnership founders.
They must oversee AI performance and ensure that the AI systems are designed and implemented in a way that complies with the law.
In addition, businesses must be aware of the evolving regulatory setting surrounding AI and ensure that they are compliant with relevant laws and regulations. This includes staying up-to-date with developments in Australian law and other jurisdictions, and being prepared to adapt to changing regulatory requirements.
Ultimately, the use of AI in business operations requires a careful and considered approach, with a focus on managing risks, ensuring compliance, and protecting consumers. By taking a proactive and informed approach to AI adoption, businesses can minimize the risks and maximize the benefits of this powerful technology.
