Air Canada Has Been Ordered To Honor A Fake Refund Policy Created By Its Chatbot

Air Canada finds itself in a legal predicament following a dispute involving its AI-powered chatbot. Initially, the chatbot’s response to a customer query regarding bereavement rates led to unexpected consequences, prompting a legal battle over the company’s accountability for the chatbot’s actions.

A Canadian customer sought clarification on bereavement rates from Air Canada’s chatbot after the demise of his grandmother. The chatbot advised submitting a ticket for a reduced bereavement rate within 90 days of issuance, as reported by Ars Technica. Following the chatbot’s guidance, the customer booked a ticket and later requested a refund based on the chatbot’s instructions. However, Air Canada’s actual policy stipulated no refunds for bereavement travel post-booking.

Initially, Air Canada declined to honor the chatbot’s assurance, citing the existence of its bereavement policy, which contradicted the chatbot’s guidance. Despite this, the company offered a $200 credit for future use. Dissatisfied, the customer pursued legal action in small claims court, challenging Air Canada’s accountability for the chatbot’s erroneous guidance.

In an unusual defense, Air Canada argued that the chatbot constituted a separate legal entity responsible for its actions—a novel assertion within Canadian legal proceedings. Despite this argument, the court ruled in favor of the customer, compelling Air Canada to refund the passenger $650.88 and cover court fees.

Furthermore, the repercussions of this case extended to the chatbot’s status, as it ceased operations on Air Canada’s website following the court ruling. This development suggests the tangible impact of legal disputes on the functionality and deployment of AI-driven customer service platforms.

The legal dispute between Air Canada and a customer regarding the chatbot’s advice highlights the complexities of legal liability in the context of AI technology. The outcome underscores the importance of clarity and accuracy in AI-driven customer interactions, as well as the evolving legal landscape surrounding AI’s role in business operations.

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