Artificial intelligence (AI) today does not merely analyse data — it makes decisions that directly affect key business processes, from recruitment to lending and marketing. AI errors may result in discrimination, financial losses, infringements of consumer rights, and reputational risks. The question “Who is liable for these errors?” has become a key issue for companies.
As a general rule, liability rests with the company providing the end service, rather than with the model developer or the owner of the server infrastructure. If a business has integrated a neural network, for example, into its pricing process or customer chatbot, it is that business which is accountable to the user for the correctness of the outcome.
Developers are liable for defects in the code and for breaches of system quality requirements. If the error was caused by a technical failure, claims may be brought against the developer.
Users are liable for improper use of AI, disregard of limitations, and lack of oversight. For example, an employee used a chatbot to analyse personal data in breach of internal rules, and the data were leaked. Liability fell on the employee rather than on the developers.
Legislation has not yet laid down specific rules, but new instruments, such as the EU AI Act, are shaping the roles and obligations of operators of high-risk systems:
A breach of these requirements is not only treated as non-compliance, but may also become direct evidence of fault: in the event of an incident, this materially increases the liability of the company that deployed the AI without proper oversight.
Moffatt v. Air Canada. A customer used the airline’s chatbot to request information about a bereavement fare. The chatbot stated that compensation could be claimed after the trip; the customer purchased tickets, completed the journey, and submitted an application. The application was rejected, and when he brought the matter before the court, Air Canada attempted to shift the blame to the “chatbot”. The court confirmed that the chatbot forms part of the company’s website, and that the company itself is responsible for all information provided there. Air Canada was held liable to compensate the fare difference.
Walters v. OpenAI. A radio host brought a claim against OpenAI, alleging that ChatGPT had identified him as being involved in financial misconduct within the Second Amendment Foundation. The court concluded that the algorithm had warned of possible inaccuracy and did not permit its responses to be treated as wholly reliable. The claimant failed to prove that OpenAI had acted negligently or with malicious intent. The claim was dismissed.
This shows that warnings, quality control, and informing users help to protect developers in disputes concerning inaccuracies. However, companies that publish AI-generated responses remain exposed to risk if they do not ensure the necessary and sufficient oversight of how those responses are used.
Accordingly, liability for AI errors always rests with the people and organisations that created, deployed, and use it. To reduce risks, businesses need to build an AI governance system, from policies and processes to contractual arrangements.
AI does not relieve anyone of liability; on the contrary, it requires clear oversight, transparency, and a properly structured risk management system.
AI errors are inevitable, but the risks for a company can be minimised by establishing transparent processes, quality control, and allocation of responsibility. REVERA’s experts can help to:
Do not leave risk to chance — contact REVERA and protect your business against the legal and reputational threats associated with the use of AI.
Authors: Daria Gordey, Artem Handriko.
