When AI gets it wrong: Emerging litigation risks for businesses, not just their lawyers

Artificial intelligence (AI) is rapidly becoming part of everyday business operations. Companies increasingly rely on AI-powered tools to screen job applicants, evaluate creditworthiness, interact with customers, and automate decisions that previously required human judgment. These technologies promise efficiency and cost savings, but they also introduce significant legal risks.

You can’t just blame the machine

As businesses integrate AI into their operations, litigators will be increasingly faced with a novel question: When an AI system used by a company produces an inaccurate, discriminatory, or otherwise harmful result, who is liable and for what?

The answer may turn out to be less novel than the technology. Although AI will certainly prompt new factual and evidentiary questions, existing state and federal laws already supply the causes of action that are likely to apply, and courts have shown little patience for the argument that the machine, not the business, is to blame.

For example, in April 2024, Massachusetts Attorney General Andrea Campbell issued an advisory clarifying that the commonwealth’s existing consumer protection, antidiscrimination, and data security laws apply to AI and algorithmic decision-making systems. The advisory specifically identifies the Massachusetts Consumer Protection Act, Chapter 93A; the Massachusetts Anti-Discrimination Law, Chapter 151B; and the Data Security Law, Chapter 93H as potential sources of liability for businesses developing, supplying, or using AI.