Digital Transformation: The legal Impact of Chatbots on Company-Customer Interaction

Published on Apr 15, 2024

Digital Transformation: The legal Impact of Chatbots on Company-Customer Interaction

By Milagros Tallarico & Melany Di Polvere (Alfaro Abogados)

In the digital era, the development of Artificial Intelligence systems -such as chatbots - has significantly transformed the way businesses interact with their customers. However, along with technological advancements come inherent challenges, and one of the most prominent is the risk of misusing these automated tools.

Recently, a notable failure by Air Canada highlights the legal and ethical repercussions of improper chatbot implementation. In this article, we will closely examine this specific case, which involves the communication of inaccurate information by an airline's chatbot.

  • Moffatt v. Air Canada


The recent decision in Moffatt v. Air Canada, represents a milestone in the expanding field of digital interactions and accountability. The case grapples with whether a company can be held liable for misleading information provided by an automated chatbot on its website.

In this case, Jake Moffatt sought a refund from Air Canada, claiming he relied on incorrect advice from the airline’s chatbot regarding bereavement fares. The chatbot suggested that Mr. Moffatt could retroactively apply for bereavement fares, a statement later contradicted by another page on Air Canada’s website. Mr. Moffatt sought compensation for the difference between the regular and bereavement fares.

Air Canada argued that it could not be held responsible for the chatbot’s misleading information and claimed that Mr. Moffatt did not follow the proper procedure for bereavement fare requests. It asserted that the chatbot, despite being part of the Air Canada website, should be considered a separate entity and, thus, absolved it of any liability for its inaccuracies.

The decision: Key aspects.

The tribunal held that “given their commercial relationship as a service provider and consumer” “Air Canada owed Mr. Moffatt a duty of care.” It also found that the Chatbot gave Mr Moffatt inaccurate information. Also, the tribunal held that Air Canada was liable for the misleading information provided by the chatbot. According to the tribunal generally “the applicable standard of care requires a company to take reasonable care to ensure their representations are accurate and not misleading.” It made a finding that Air Canada breached this duty “as Air Canada had failed to exercise reasonable care to ensure the information’s accuracy”.

This decision is important as it reaffirms the well established principle that generally organizations are responsible for the acts or omissions of the computer systems they use and for misrepresentations they make to the public, irrespective of whether it comes from a human representative or an automated chatbot.

Operation of chatbots – User Experience

The proliferation of Artificial Intelligence systems, such as chatbots, has fundamentally transformed the dynamics of customer-company interaction. These virtual assistants, driven by sophisticated artificial intelligence algorithms, streamline online inquiries through an intuitive interface, leveraging advanced natural language processing and machine learning capabilities to comprehend and respond to user queries. Despite their inherent efficiency in delivering prompt and accurate responses, chatbots may encounter challenges with intricate inquiries, potentially affecting the overall user experience. To enhance user satisfaction, organizations are embracing cutting-edge technologies like advanced natural language processing and seamless integration with customer data management systems. This underscores the imperative of continual innovation in chatbot design and functionality to ensure optimal performance and responsiveness.

In summary, chatbots serve as indispensable assets in the realm of online customer service. Their adeptness in providing swift and effective responses renders them pivotal components of many companies' digital strategies. However, sustained enhancement remains imperative to uphold an exemplary user experience, necessitating ongoing innovation in chatbot design and functionality to adeptly meet evolving market dynamics and exceed customer expectations.


In conclusion, the integration of chatbots into company-customer interactions epitomizes the digital transformation era. While chatbots streamline inquiries and enhance efficiency, the recent Moffatt v. Air Canada case underscores the importance of accountability and accuracy in automated systems. The decision reaffirms that companies bear responsibility for their chatbots' actions, highlighting the need for continual innovation to uphold an exemplary user experience. As organizations navigate the complexities of AI-driven interactions, the evolution of chatbot design and functionality remains essential to meet evolving market dynamics and exceed customer expectations in the digital landscape.