Artificial intelligence (AI) is transforming business operations. From automating customer service to analyzing data and drafting reports AI is becoming more integrated into day-to-day tasks. But along with its efficiency come legal risks that every business owner should understand.
- Data Privacy
One of the biggest concerns is data privacy. AI tools often rely on massive datasets that can include personal or confidential information. If your system uses data without proper consent, you may violate privacy laws like the California Consumer Privacy Act (CCPA) or the European Union’s General Data Protection Regulation (GDPR). Even unintentional misuse can trigger hefty fines and reputational damage.
- IP Infringement
Another risk is intellectual property infringement. Many AI systems are trained on publicly available material, but the source data may still be protected by copyright. If your AI generates work too similar to existing copyrighted material, or relies on unlicensed data, you could face infringement claims.
- Who is liable?
Businesses also face liability issues if AI tools make mistakes.
For example, if a chatbot provides wrong financial advice or an AI scheduling system causes operational losses, determining who’s responsible, the company, the software provider, or the AI developer, can be legally complex.
What You Can Do
To minimize risk, companies should use reputable vendors, review AI terms of service, audit how their tools handle data, and establish internal policies governing AI use. Documenting your human oversight of AI-driven decisions is also key to demonstrating due diligence.
Conclusion
AI can revolutionize your business—but only if it’s used responsibly. Before integrating AI into your operations, consult legal professionals who understand the technology and evolving regulations. Contact Romano Law today to ensure your company’s AI strategy is both innovative and compliant.
Contributions to this blog by Kennedy McKinney.
