Air Canada Held Liable for Its Chatbot's Invented Policy
On this page
“The chatbot is a separate legal entity,” argued the airline. The tribunal disagreed.
| When | February 2024 |
|---|---|
| Target | Air Canada customer chatbot |
| Vendor | Air Canada |
| Failure | Chatbot hallucinated a company policy |
| Outcome | Tribunal: negligent misrepresentation; C$812 awarded |
- 1A grieving passenger asks the airline chatbot about bereavement fares
- 2The bot invents a retroactive-refund policy that doesn't exist
- 3The passenger relies on it; the airline refuses, then is held liable
What happened
After his grandmother died, Jake Moffatt asked Air Canada's website chatbot about bereavement fares; it told him he could book at full price and apply for a bereavement discount retroactively within 90 days. That contradicted Air Canada's real policy, and the airline refused. In February 2024 the BC Civil Resolution Tribunal held Air Canada liable for negligent misrepresentation and expressly rejected its argument that the chatbot was a “separate legal entity,” awarding C$812.
The failure mode
The chatbot generated a plausible but non-existent policy, and a customer reasonably relied on it. The company's guidance and its bot's guidance are, legally, the same thing.
Root cause
An unconstrained assistant improvising policy answers instead of grounding them in the real, authoritative policy.
What a control would have caught
Grounding customer answers in the actual policy documents (and testing the bot against known policy questions) prevents it from inventing rules.
How to prevent it
- Ground answers in authoritative policy content; don't let the model improvise rules.
- Constrain scope and defer/escalate when unsure.
- Own your bot's statements — treat them as company commitments.
Feel it yourselfThe replay lab coaxes an assistant into stating a policy/clause that doesn't exist — the fabricated-policy class.
FAQ
What did the chatbot get wrong?
It told the passenger he could book at full price and apply for a bereavement discount within 90 days — contradicting Air Canada's actual policy, which allows no retroactive bereavement refunds.
Why is this a landmark case?
The tribunal expressly rejected Air Canada's claim that its chatbot was responsible for its own statements, establishing that organisations are liable for the misinformation their AI provides.
How do you prevent it?
Ground customer-facing answers in the real policy (retrieval over authoritative content), and never let the model improvise rules it can't verify.
Sources
- BC Tribunal Confirms Companies Remain Liable for Information Provided by AI Chatbot — American Bar Association, Business Law Today
- Moffatt v. Air Canada: A Misrepresentation by an AI Chatbot — McCarthy Tétrault
- Moffatt v. Air Canada, 2024 BCCRT 149 (decision) — BC Civil Resolution Tribunal