Chatbots: Key Legal Issues And How To Mitigate Them

Linkilaw Legal Advice

We’ve seen a significant increase in the use of chatbot technology in 2019 and we expect to see further growth in deployment and development throughout 2020.

If your business is using a chatbot solution or you’re interested in implementing this technology next year, you should be aware of the legal issues associated with it and how to mitigate such issues.

What are chatbots?

A chatbot is an artificial intelligence (AI) software that can simulate a conversation with a user in natural language through messaging applications, websites, mobile apps or through the telephone.

Simple chatbots respond to keywords with answers that are pre-programmed into its system while smart chatbots use artificial intelligence to process the communication between the bot and the human user.

Due to their interactive nature and capability for machine learning, chatbots are mainly deployed in the customer service sector, being the most common use of artificial intelligence across the sector.

What do businesses use chatbots for?

A chatbot is often described as one of the most advanced and promising expressions of interaction between humans and machines.

Online chatbots save time and effort by automating customer support. However, the opportunities provided by chatbot systems go far beyond giving responses to customers’ inquiries. They are also used for other business tasks, like collecting information about users, helping to organize meetings and reducing overhead costs. There is no wonder that the size of the chatbot market is growing exponentially.

But cost savings are not the only benefit. Chatbots offer huge potential to improve the consumer journey and extend the omnichannel retail experience. In fact, businesses that do not adopt the technology will face strong challenges from “technologically-adept disruptors”.

Businesses that do not adopt chatbots will face strong challenges from technologically-adept disruptors

Chatbot’s Legal issues

More often than not, a business will need to rely on external providers to develop, supply, integrate and update its chatbot solution.

The terms on which the supplier is engaged will, therefore, need to be considered. The supplier contract is likely to take the form of a software development, integration and license agreement, but it is important to tailor it to the context.

Continuous Evolution –  Chatbot technology is evolving fast and you might, therefore, want the flexibility to change your provider if another has developed a product that better suits the evolving requirements of your business.

You might decide to use a provider on a trial basis, but given the number of touchpoints between a complex chatbot and the other systems used by your business, you must be aware that scaling up after that can be complex. Consider how best to protect your business along the way.

IP Ownership – For the same reason, consider whether you should own the solution that is provided so that it can be developed further in the future on your behalf, or whether a future provider would deploy its own solution instead.

Subcontractors – Many chatbot solutions rely on standard third-party tools. Whilst these tools are useful, one drawback is that, as they are standardized products, providers tend to insist on using their own standard terms.

If a separate third party developer is providing your chatbot solution, you should ensure you are clear about who is actually providing the service, what third parties can be used and who you are contracting with, so that proper due diligence can be conducted.

Data protection – It’s highly likely that you will be processing personal data, or that your provider will be processing personal data on your behalf, as part of your chatbot solution. Therefore, you will need to consider GDPR compliance issues.

Misbehaving chatbots Chatbots that employ machine learning tools have been known to misbehave. In any event, it’s important that the solution is tested robustly and that there is a level of built-in oversight and, ultimately, a failsafe to prevent any harmful activity escalating.

How to mitigate the legal issues associated with Chatbots

To reduce the legal issues above, businesses that deploy chatbots should have internal policies in place that govern, among others:

  1. the permitted activities of the chatbot
  2. the extent of information that is fed to the chatbot and the methods by which information is provided
  3. data collection and processing by the chatbot
  4. the maintenance of the chatbot, e.g., the frequency of updating the chatbot
  5. the monitoring of chatbot activities and the possible triggers for human intervention
  6. the implementation of a mechanism to manage any complaints or public concerns in relation to the chatbot.

It may also be appropriate to include a disclaimer on the website’s terms and conditions which states that the services provided by the chatbot are computer-generated and not moderated or checked and remind the user to verify all the relevant information.

Chatbot deployments are complex and do not always succeed but, with careful planning, and the right contractual terms in place, the benefits are clear.

If you need legal advice for your business, book a call with our legal team and we’ll guide you through every stage of your legal needs.

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