Customer-facing Chatbots
AI chatbots handling customer interactions face specific regulatory requirements for transparency, accuracy, and consumer protection. The FTC has launched targeted investigations into AI chatbot practices.
Key Considerations
- →Disclose AI nature to users clearly
- →Avoid deceptive practices per FTC guidance
- →Handle sensitive data appropriately
- →Implement human escalation pathways
FTC focus on AI chatbots
The FTC launched an inquiry into AI chatbots in September 2025, focusing on companion and customer service applications. Key concerns include: inadequate disclosure that users are interacting with AI, deceptive claims about chatbot capabilities, data collection practices from conversations, and harms from chatbot advice or recommendations. Expect enforcement to follow investigation.
Disclosure requirements
Both FTC guidance and EU AI Act require clear disclosure when users interact with AI. Disclosure must be: timely (before or at interaction start), clear (not buried in terms of service), and conspicuous (users actually see it). Simple statements like 'You're chatting with an AI assistant' suffice, but must be genuinely visible in the interface.
Avoiding deceptive practices
Don't claim your chatbot can do things it can't. Common pitfalls: overstating accuracy of responses, implying human-level understanding, providing advice in regulated domains (medical, legal, financial) without appropriate disclaimers, and failing to disclose limitations. Test your chatbot's responses in edge cases and document known limitations.
Data handling in conversations
Chatbot conversations may contain sensitive information users didn't intend to share. Implement: data minimization (don't store more than necessary), clear retention policies, redaction of sensitive data from training, and privacy-preserving conversation logging. Consider whether conversations are covered by your privacy policy's disclosures.
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