What happened in the Air Canada chatbot case?
In November 2022 Jake Moffatt's grandmother died, and they went to Air Canada's website to book flights. The site's chatbot told them they could buy a full-price ticket and apply for the cheaper bereavement fare afterwards. Air Canada's own bereavement page said the opposite: no refunds once travel was done3. When Moffatt applied, Air Canada refused, even after one of its representatives admitted the chatbot had used "misleading words"3.
Moffatt took Air Canada to British Columbia's Civil Resolution Tribunal and won in February 20243. The tribunal found negligent misrepresentation: a business owes its customers reasonable care that what it tells them is accurate3. Air Canada had argued it could not be liable for its chatbot, in effect treating the chatbot as "a separate legal entity". The tribunal called that "a remarkable submission" and said it makes no difference whether information comes from a static page or a chatbot3. Air Canada was ordered to pay the fare difference, interest and fees3.
| Question | What the tribunal said | Settled by this case? |
|---|---|---|
| Is a chatbot responsible for its own statements? | No. It is part of the company's website, and the company is responsible for all the information on it | Yes, for this case |
| Must customers check the chatbot against other pages? | No. Air Canada did not explain why customers should have to double-check one part of its site against another | Yes, for this case |
| Did the company's terms protect it? | Not proven. Air Canada did not file the part of its tariff it relied on | No; a disclaimer was never tested |
| What was the legal basis? | Negligent misrepresentation: failing to take reasonable care that its statements were accurate | Yes, for this case |
| Does it bind courts in the United States? | It is a decision of a Canadian small-claims tribunal | No |
Would a disclaimer have protected Air Canada?
Nobody knows, because Air Canada never showed one. It said the terms of its tariff protected it, but did not file the relevant part of the tariff, and the tribunal held that a defence based on a contract needs the contract3. So the case says nothing about whether a well-written disclaimer would have worked.
What it does say is unhelpful to anyone hoping to rely on fine print. Air Canada argued that the correct policy was on another page of its site. The tribunal answered that Air Canada did not explain why customers should have to double-check information found in one part of its website on another3. A banner saying "our chatbot may be wrong" asks customers to do exactly that.
What does US law say about a chatbot's wrong answer?
We found no US court ruling on the same facts, so the honest answer rests on general law. The FTC Act declares "unfair or deceptive acts or practices in or affecting commerce" unlawful1. A chatbot that tells customers something false about your prices, refunds or services is your business telling them, and nothing in that wording carves out software.
The FTC has said this directly about AI. Announcing a set of cases in September 2024, it said "there is no AI exemption from the laws on the books"2. One of those cases was DoNotPay, which marketed its chatbot as "the world's first robot lawyer" without testing whether its output matched a human lawyer's2. That case was about the vendor's marketing claims, not a customer service answer, but the principle is the same: you answer for what you put in front of customers.
How do you keep a chatbot from promising what you can't deliver?
Give the bot your written policies and nothing else, and tell it to quote them rather than paraphrase. The Air Canada chatbot actually linked to the right page while giving the wrong answer3, so a link is no substitute for getting the words right. For refunds, cancellations, warranties and prices, the safest setup either quotes your written rule or hands the question to a person.
Read the transcripts every week, starting with any conversation where money, deadlines or exceptions came up. When you find a wrong answer, fix the source text the bot reads, not just that one reply, then ask the same question again to confirm the fix.
If a customer relied on a wrong answer, deal with it the way you would if a staff member had said it. Air Canada fought a small claim over a single refund and lost. This page is general information, not legal advice; for a dispute that matters, talk to a lawyer licensed in your state.