Cautions of Using AI in Your Business


The new age of using artificial intelligence (“AI”) to increase productivity in your business is here and can be a very valuable tool when used correctly. However, businesses who decide to utilize AI need to be aware of the potential risks involved. These risks vary from providing your clients with false information or data, to exposing your business to potential civil liability. As with any new technology, it is important to proceed with caution before relying on it to support your business model.

While not an exhausted list, here are a few “red flags” to watch out for when using AI:

1.  “Phantom” Sources

While most AI models claim to be able to provide accurate and real time information within seconds, it has been shown that multiple AI sources will provide the user with phantom or ghost sources and quotes. Incorrect information provided by these AI sources have already affected businesses in multiple fields by providing misleading algorithms for financial information as well as providing false quotes in recent Court decisions.

Even though AI can be a helpful tool for research, it is important to always double check the sources provided. If there was no source provided, most AI tools will allow follow up requests to obtain where the information was taken from. Once you have the source, it is still important to verify all of the information is correct.

2.  Unintentional Biases

There is no denying the existence of bias in businesses which were already present before the use of AI, and unfortunately, these biases have snuck into most AI models based on the data they use as well as the algorithms and code used to create them. There have already been documented cases of cleat AI biases when being used for recruiting, advertising, and even healthcare risks.

One of the most utilized functions of AI models which businesses have used is to have the AI tools sort through applications and resumes to assist in the hiring process. Again, while this can be a helpful tool to quickly identify qualified applicants, it is important to verify that underrepresented or minority groups are not being excluded based on an implicit bias in the AI’s code.

3.  Unexperienced Users

AI is advertised as an easy alternative for individuals and businesses to obtain information and assist in everyday life, but it is still necessary to understand how to use it correctly. Inadvertent disclosures as well as failures to comply with privacy statutes when relying on AI can lead to potential civil liability.

A quick example of this is a business relying on AI to write contracts or policies for websites. An unexperienced user of AI could simply ask the model to “create a privacy policy for my website compliant with all applicable laws,” and might believe the work product to be sufficient. However, this request is likely still far too broad and could lead to a deficient privacy policy leading to potential exposure in a civil suit. When using AI, it is important to be as specific as possible which means that some preliminary research should be done to identify exactly which jurisdiction or which laws you are asking the model to comply with. However, it is still important to note that the more specific your request, the more likely AI models can provide you with the phantom sources explained above.

AI might be the way of the future, but it still has its flaws, especially when it is used incorrectly. Avoid potential civil liability and proceed with caution when using AI in your business model. If you have questions regarding AI and your business, please reach out to one of the attorneys you work with at Schwartz Semerdjian.