In a warning to global carriers adopting AI for customer service platforms, Air Canada lost a small claims court case against a grieving passenger when it tried and failed to disavow its AI-powered chatbot.
The passenger claimed to have been misled on the airline’s rules for bereavement fares when the chatbot hallucinated an answer inconsistent with airline policy. The Tribunal in Canada’s small claims court found the passenger was right and awarded them $812.02 in damages and court fees.
Following the death of their grandmother, the passenger used Air Canada’s chatbot on the website to research flights which suggested the passenger could apply for bereavement fares retroactively. The passenger captured a screenshot of the chatbot’s response, which they showed to the Tribunal. The chatbot told the customer:
“Air Canada offers reduced bereavement fares if you need to travel because of an imminent death or a death in your immediate family…If you need to travel immediately or have already travelled and would like to submit your ticket for a reduced bereavement rate, kindly do so within 90 days of the date your ticket was issued by completing our Ticket Refund Application form.”
The crux of the Air Canada case lay in the underlined text, which was a live link to the airline’s Bereavement Fares Policy page on the airline’s website. That page contradicts the chatbot stating, “Please be aware that our Bereavement policy does not allow refunds for travel that has already happened.”
Air Canada argued that as the link was provided in the chatbot’s response the passenger had an opportunity to confirm the chatbot’s reply. But the court found Air Canada failed to explain why the passenger should not trust information provided on its website by its chatbot.
The passenger learned later through Air Canada employees that Air Canada did not accept retroactive bereavement applications, but still pursued the refund because “they relied on the chatbot’s advice” according to case records. Air Canada offered a $200 flight voucher to satisfy the passenger’s complaint, which the passenger refused.
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Chatbot Failure Was “Negligent Misrepresentation”
The Tribunal determined the claim against Air Canada constituted “negligent misrepresentation.”
“Air Canada argues it cannot be held liable for information provided by one of its agents, servants, or representatives – including a chatbot. It does not explain why it believes that is the case. In effect, Air Canada suggests the chatbot is a separate legal entity that is responsible for its own actions. This is a remarkable submission. While a chatbot has an interactive component, it is still just a part of Air Canada’s website. It should be obvious to Air Canada that it is responsible for all the information on its website. It makes no difference whether the information comes from a static page or a chatbot,” Christopher C. Rivers, Civil Resolution Tribunal Member, wrote in his decision on the case.
Rivers found Air Canada “did not take reasonable care to ensure its chatbot was accurate.” The airline failed to explain to the Tribunal “why the webpage titled ‘Bereavement travel’ was inherently more trustworthy than its chatbot. It also does not explain why customers should have to double-check information found in one part of its website on another part of its website.”
Has Air Canada Invested Too Heavily In AI?
TORONTO, CANADA: Air Canada planes grounded at the Toronto’s Pearson Airport 02 September due to … [+] the pilot strike. The pilots are demanding better salary’s and working conditions. Some 60,000 passengers are affected daily. AFP PHOTO/ Thomas CHENG (Photo credit should read THOMAS CHENG/AFP via Getty Images)
AFP via Getty Images
Air Canada introduced Artificial Intelligence Labs in 2019 to apply AI towards improving its operations and customer experience.
“Big data and AI are now a big part of our business,” Calin Rovinescu, Air Canada President and CEO told Future Travel Experience at time.
Last year, Air Canada also announced big plans for AI-powered voice customer service chatbots, which could ultimately replace the same people who explained to the bereaved passenger involved in the case that the website chatbot was wrong.
Curiously, as reported in Business Traveler, Air Canada’s Vice President and Chief Information Officer Mel Crocker acknowledged that the airline’s initial investment in AI-powered voice customer service is higher than paying their call center workers to handle simple customer questions.
“We’re not going into this with a view of killing jobs,” he said. “But if we can use a human to solve something that requires a human touch, and technology to solve something that can be automated, we will do that.”
In what comes across now as an ironic statement, Crocker added, “The biggest benefit of AI to us is that it fundamentally creates a better customer experience. And happier customers means they are travelling more with Air Canada.”
The small claims court case did not cost Air Canada much in terms of dollars and cents, but it hasn’t helped its customer service reputation. The airline could easily afford to pay the passenger the bereavement fare difference.
Had Air Canada done so, it would not have drawn so much attention to the problem as it researched what prompted the chatbot to misinform the customer. But the case raised important questions and potentially set a precedent on airlines’ liability for the performance of their AI-powered systems.
Consumer Rights Versus AI Hallucinations
AI tools are vulnerable to hallucinations, where they appear to make up information out of the blue.
“AI hallucination is a phenomenon wherein a large language model (LLM)—often a generative AI chatbot or computer vision tool—perceives patterns or objects that are nonexistent or imperceptible to human observers, creating outputs that are nonsensical or altogether inaccurate,” IBM IBM
explains on its website.
Air Canada’s rival WestJet went through one such hallucinatory incident in 2018. Its chatbot, Juliet, incorrectly interpreted a happy customer’s glowing comment on a cabin crewmember’s care over her succulent cutting and referred that customer to a suicide hotline. No harm was done in that case, and the airline’s customer found the situation amusing.
But as the more recent Air Canada incident shows, AI hallucinations can come at a price.
While airlines are not financial institutions, their handling of significant transactions and currency-like loyalty points and miles make them vulnerable to liability when a hallucinating AI misinforms consumers. The U.S. Consumer Financial Protection Bureau closely monitors the use of artificial intelligence and the impact of the technology on consumer rights.
In research published last year on banking chatbots, CFPB found chatbots can help answer basic customer questions, but “their effectiveness wanes as problems become more complex.”
“Review of consumer complaints and of the current market show that some people experience significant negative outcomes due to the technical limitations of chatbots functionality,” they noted in their report. “There are many kinds of negative outcomes for the customer, including wasted time, feeling stuck and frustrated, receiving inaccurate information, and paying more in junk fees. These issues are particularly pronounced when people are unable to obtain tailored support for their problems.”
CFPB also warned “financial institutions risk violating legal obligations, eroding customer trust, and causing consumer harm when deploying chatbot technology. Like the processes they replace, chatbots must comply with all applicable federal consumer financial laws, and entities may be liable for violating those laws when they fail to do so. Chatbots can also raise certain privacy and security risks. When chatbots are poorly designed, or when customers are unable to get support, there can be widespread harm and customer trust can be significantly undermined.”
Air Canada is not alone in using AI to answer common customer queries. Many airlines and airports worldwide have introduced automated chats and bots into their customer service flow directly on their websites and apps and on popular social media channels.
But as the technology is not infallible, airlines will need to consider their legal and financial exposure to AI hallucinations. They may need to rethink how far AI can take them at this stage.
TOKYO (AP) — Japanese technology group SoftBank swung back to profitability in the July-September quarter, boosted by positive results in its Vision Fund investments.
Tokyo-based SoftBank Group Corp. reported Tuesday a fiscal second quarter profit of nearly 1.18 trillion yen ($7.7 billion), compared with a 931 billion yen loss in the year-earlier period.
Quarterly sales edged up about 6% to nearly 1.77 trillion yen ($11.5 billion).
SoftBank credited income from royalties and licensing related to its holdings in Arm, a computer chip-designing company, whose business spans smartphones, data centers, networking equipment, automotive, consumer electronic devices, and AI applications.
The results were also helped by the absence of losses related to SoftBank’s investment in office-space sharing venture WeWork, which hit the previous fiscal year.
WeWork, which filed for Chapter 11 bankruptcy protection in 2023, emerged from Chapter 11 in June.
SoftBank has benefitted in recent months from rising share prices in some investment, such as U.S.-based e-commerce company Coupang, Chinese mobility provider DiDi Global and Bytedance, the Chinese developer of TikTok.
SoftBank’s financial results tend to swing wildly, partly because of its sprawling investment portfolio that includes search engine Yahoo, Chinese retailer Alibaba, and artificial intelligence company Nvidia.
SoftBank makes investments in a variety of companies that it groups together in a series of Vision Funds.
The company’s founder, Masayoshi Son, is a pioneer in technology investment in Japan. SoftBank Group does not give earnings forecasts.
Shopify Inc. executives brushed off concerns that incoming U.S. President Donald Trump will be a major detriment to many of the company’s merchants.
“There’s nothing in what we’ve heard from Trump, nor would there have been anything from (Democratic candidate) Kamala (Harris), which we think impacts the overall state of new business formation and entrepreneurship,” Shopify’s chief financial officer Jeff Hoffmeister told analysts on a call Tuesday.
“We still feel really good about all the merchants out there, all the entrepreneurs that want to start new businesses and that’s obviously not going to change with the administration.”
Hoffmeister’s comments come a week after Trump, a Republican businessman, trounced Harris in an election that will soon return him to the Oval Office.
On the campaign trail, he threatened to impose tariffs of 60 per cent on imports from China and roughly 10 per cent to 20 per cent on goods from all other countries.
If the president-elect makes good on the promise, many worry the cost of operating will soar for companies, including customers of Shopify, which sells e-commerce software to small businesses but also brands as big as Kylie Cosmetics and Victoria’s Secret.
These merchants may feel they have no choice but to pass on the increases to customers, perhaps sparking more inflation.
If Trump’s tariffs do come to fruition, Shopify’s president Harley Finkelstein pointed out China is “not a huge area” for Shopify.
However, “we can’t anticipate what every presidential administration is going to do,” he cautioned.
He likened the uncertainty facing the business community to the COVID-19 pandemic where Shopify had to help companies migrate online.
“Our job is no matter what comes the way of our merchants, we provide them with tools and service and support for them to navigate it really well,” he said.
Finkelstein was questioned about the forthcoming U.S. leadership change on a call meant to delve into Shopify’s latest earnings, which sent shares soaring 27 per cent to $158.63 shortly after Tuesday’s market open.
The Ottawa-based company, which keeps its books in U.S. dollars, reported US$828 million in net income for its third quarter, up from US$718 million in the same quarter last year, as its revenue rose 26 per cent.
Revenue for the period ended Sept. 30 totalled US$2.16 billion, up from US$1.71 billion a year earlier.
Subscription solutions revenue reached US$610 million, up from US$486 million in the same quarter last year.
Merchant solutions revenue amounted to US$1.55 billion, up from US$1.23 billion.
Shopify’s net income excluding the impact of equity investments totalled US$344 million for the quarter, up from US$173 million in the same quarter last year.
Daniel Chan, a TD Cowen analyst, said the results show Shopify has a leadership position in the e-commerce world and “a continued ability to gain market share.”
In its outlook for its fourth quarter of 2024, the company said it expects revenue to grow at a mid-to-high-twenties percentage rate on a year-over-year basis.
“Q4 guidance suggests Shopify will finish the year strong, with better-than-expected revenue growth and operating margin,” Chan pointed out in a note to investors.
This report by The Canadian Press was first published Nov. 12, 2024.
TORONTO – RioCan Real Estate Investment Trust says it has cut almost 10 per cent of its staff as it deals with a slowdown in the condo market and overall pushes for greater efficiency.
The company says the cuts, which amount to around 60 employees based on its last annual filing, will mean about $9 million in restructuring charges and should translate to about $8 million in annualized cash savings.
The job cuts come as RioCan and others scale back condo development plans as the market softens, but chief executive Jonathan Gitlin says the reductions were from a companywide efficiency effort.
RioCan says it doesn’t plan to start any new construction of mixed-use properties this year and well into 2025 as it adjusts to the shifting market demand.
The company reported a net income of $96.9 million in the third quarter, up from a loss of $73.5 million last year, as it saw a $159 million boost from a favourable change in the fair value of investment properties.
RioCan reported what it says is a record-breaking 97.8 per cent occupancy rate in the quarter including retail committed occupancy of 98.6 per cent.
This report by The Canadian Press was first published Nov. 12, 2024.
