Is the mandatory disclosure of AI usage by businesses to their clients necessary?
In the UK, there is no explicit legal requirement that businesses disclose to customers that they are interacting with an AI rather than a human. However, several regulatory frameworks and ethical considerations suggest that transparency is advisable and may become increasingly important.
Currently, the UK lacks specific legislation requiring businesses to inform users when interacting with AI systems. The government’s approach has been to apply existing laws and regulations to AI technologies, rather than introducing new, AI-specific laws, which leaves room for uncertainty.
For example, under the Consumer Protection from Unfair Trading Regulations 2008, businesses are prohibited from engaging in unfair commercial practices, including misleading actions or omissions. Applying this rule, if the use of AI in customer interactions could materially affect a consumer’s decision-making, failing to disclose this might be considered misleading.
The UK General Data Protection Regulation (UK GDPR) also emphasises transparency in data processing. If an automated system processes personal data, businesses must inform individuals about the nature of this processing. While this doesn’t directly mandate disclosure of other AI interactions, it underscores the importance of transparency in automated processing activities.
Therefore, while businesses’ disclosure of AI use to customers is not legally mandated unless it is used to process client data, the existing legislation suggests businesses should prioritise transparency to avoid potentially misleading consumers and to remain compliant with broader obligations under consumer protection and data privacy laws. Additionally, businesses may want to disclose the use of AI for both ethical and practical considerations.
Most importantly, transparency about AI use can help enhance customer trust. Informing users that they are interacting with an AI system can prevent feelings of deception and promote a more honest customer relationship.
It is also important to manage user expectations. AI systems have limitations and may not be able to handle complex or nuanced queries as effectively as human agents. By disclosing the use of AI, businesses can set appropriate expectations and provide options for users to escalate issues to human representatives when necessary.
While there is no current AI-specific legal framework for disclosure, regulatory bodies and industry standards constantly evolve to keep up with new technology. For instance, the EU’s proposed AI Act includes provisions for transparency in AI interactions, which could influence future UK regulations.
The use of AI in business is a modern trend that is inevitably expanding globally, and it has become a common practice rather than a rare occurrence from onboarding assistants and instant consultations to automating complex tasks, such as generating small claims court applications with platforms like Casecraft.ai. The use of AI is now rapidly reshaping how services are delivered. We believe it is essential that all AI-driven innovations operate with care and in full compliance with legal frameworks, ensuring the protection of users’ data at every stage, and, therefore, the disclosure of AI use in business operations would be recommended not only from legal, but also from practical reasons.
Recommendations
Given the current landscape, it is advisable for businesses to:
- Disclose AI use: Inform customers when interacting with an AI system, primarily if the AI handles tasks that could influence customer decisions.
- Provide human alternatives: Offer options for customers to interact with human representatives, particularly for complex or sensitive issues.
- Stay informed: Monitor developments in AI regulation to ensure ongoing compliance with emerging legal and ethical standards.
By proactively disclosing AI use and maintaining transparency, businesses can foster trust and prepare for future regulatory requirements.
