We have yet to have a Chatbot in our CPD classes here at the UCDA, but Artificial Intelligence (AI) is becoming increasingly common in the automotive industry.
Many dealerships use AI tools to respond to customer inquiries and generate leads. While these technologies can improve efficiency, they also raise important legal questions.
A recent dispute involving an AI Chatbot’s vehicle purchase offer, highlights the potential risks of relying too much on AI. It’s a cautionary tale about giving “Skynet” too much power.
A customer wanted to sell his vehicle, which required major repairs, to a Toronto dealership. He submitted an online inquiry and received a text message from the dealership shortly afterward. The “individual” from the dealership made an offer of $27,162.79 to buy the vehicle from the customer. This “offer” came from a Chatbot!
The customer did not accept the offer. Instead, he made a counteroffer for a higher amount. Shortly after, he received a call from
a salesperson explaining that the offer had been withdrawn because it was made in error by an AI Chatbot. The dealership then offered
$20,000 for the vehicle.
The customer was upset. Legally, in our opinion, no enforceable legal contract was created here, but the dealer got bad media attention regardless.
In law, an offer can generally be revoked at any time before it is accepted, provided the revocation is communicated before acceptance occurs. Here, the customer did not formally accept the Chatbot’s offer. Instead, he made a counteroffer. A counteroffer is not an acceptance. It is a rejection of the original offer and a proposal of new terms.
The salesperson also immediately contacted the customer and made it clear that the original offer was off the table. As a result, the original offer was no longer open for acceptance, regardless of whether it was made by a person or an AI Chatbot.
This situation raises several fascinating questions about whether an AI Chatbot can even enter into a binding contract on behalf of a dealership. The system is not “registered” to do so, as a human must be with OMVIC. There is no provision for it in existing law. There is no binding written and signed contract as required by Ontario law.
Despite all these fancy defences, the dealership honoured the AI offer, to try to undo the bad press and attention this situation caused them, and it’s hard to blame them.
Dealers would be wise to use this story as a learning tool and remember that, while AI has its place, this is still a “human” business, for better or worse. We need to design better guardrails for our AI tools.
Members interested in reading the full story can do so by following this link: https://tinyurl.com/2t75mf6h