Chatbot A Legal Entity? Air Canada Argued It Is 'Responsible For Its Own Action' In An Attempt To Evade A Refund. Here's What Happened Next - Air Canada (OTC:ACDVF)

In the series of AI-powered chatbots going rogue, Air Canada's ACDVF conversational tool is the latest to bring trouble. The airline has been ordered to honor a refund policy that was mistakenly communicated by its chatbot.

What Happened: Last week, Air Canada was ordered to refund a passenger misled by the airline’s chatbot. In November 2022, the passenger, Jake Moffatt, booked a flight with the airline following the death of their grandmother.

At the time, Moffatt took assistance from Air Canada's chatbot while booking the flights and was suggested that they "could apply for bereavement fares retroactively."

However, the passenger later learned from "Air Canada employees that Air Canada did not permit retroactive applications."

Moffatt alleged that the chatbot provided inaccurate information, leading them to book a flight and request a refund within 90 days. "They claim $880 for what they say is the difference in price between the regular and alleged bereavement fares."

In the complaint filed with the Civil Resolution Tribunal, the passenger alleged that despite their efforts to obtain a refund, Air Canada refused, offering a $200 coupon instead.

In response, Air Canada argued that the chatbot was a separate legal entity and, thus, not liable for its misleading information. However, the tribunal ruled in favor of Moffatt, ordering a partial refund of $650.88 CAD (about $482 USD).

"Air Canada argues it cannot be held liable for information provided by one of its agents, servants, or representatives – including a chatbot. It does not explain why it believes that is the case. In effect, Air Canada suggests the chatbot is a separate legal entity that is responsible for its own actions. This is a remarkable submission,” the order read, adding, “While a chatbot has an interactive component, it is still just a part of Air Canada's website. It should be obvious to Air Canada that it is responsible for all the information on its website. It makes no difference whether the information comes from a static page or a chatbot."

The case was first reported by ARS Technica.

The report noted that experts told the Vancouver Sun that Moffatt’s case seems to mark the first time a Canadian company attempted to assert non-liability for information relayed by its chatbot.

Why It's Important: Last year, in December, Chevrolet’s ChatGPT-powered chatbot was manipulated by users to make false statements and even sell a car for $1.

At the time, General Motors told Benzinga, "We certainly appreciate how chatbots can offer answers that create interest when given a variety of prompts, but it’s also a good reminder of the importance of human intelligence and analysis with AI-generated content."

In January this year, the AI chatbot at Dynacraft Parcel Delivery or DPD, went rogue, insulting a customer and criticizing the company. At the time, the company said, "An error occurred after a system update yesterday. The AI element was immediately disabled and is currently being updated."

In the same month, Amazon’s AI chatbot, referred to as “Q”, reportedly encountered criticism for generating inaccurate outputs for users, suggesting instances of "hallucination."

Despite the negative reports, an October 2023 report stated that the AI chatbot market is positioned for significant growth in the coming years, driven mainly by rising demands across sectors like Healthcare, Retail, BFSI (Banking, Financial Services, and Insurance), Media & Entertainment, Travel & Tourism, E-commerce, and more.

Image Credits – Shutterstock

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