5 Legal Risks of Using AI in Business
AI tools are revolutionizing how companies operate. From improving efficiency to automating decision-making, the advantages are clear. But these benefits also bring serious legal concerns. If your business is based in New York State, understanding the 5 legal risks of using AI in business is essential for staying compliant and avoiding unnecessary exposure.
1. Data Privacy Violations
New York does not currently have a comprehensive privacy law like California’s CCPA. However, businesses still need to follow federal regulations such as HIPAA (for health data) and the Gramm-Leach-Bliley Act (for financial data). New York’s SHIELD Act also applies and requires reasonable data security safeguards.
If your AI systems use personal or sensitive information, it’s critical to ensure proper data collection, user consent, and strong cybersecurity measures.
2. Intellectual Property Issues
AI tools often rely on third-party content or generate new material. This raises serious intellectual property questions. If your system uses copyrighted material without permission or creates content with unclear ownership, you could face legal disputes.
Businesses in New York should work with counsel to confirm ownership rights and secure proper licenses.
3. Bias and Discrimination
New York State enforces strong anti-discrimination laws across employment, housing, and lending. If your AI system unintentionally leads to biased outcomes — especially in hiring or credit decisions — your company could face enforcement or lawsuits.
Routine audits and carefully selected training data help reduce this risk.
4. Liability for AI Decisions
If your AI tool makes a mistake, such as approving a fraudulent transaction or providing inaccurate information, your business could be held responsible. Liability often depends on who made or controlled the decision.
Clear accountability policies and vendor agreements are essential to managing this risk.
5. Changing Regulations
New York has not yet passed AI-specific laws, but proposed legislation suggests change is coming. Businesses should monitor both state and federal developments, especially regarding transparency and accountability in AI use.
Being proactive can help you avoid last-minute compliance challenges.
How We Can Help
At our firm, we help New York businesses reduce legal risk and respond effectively when disputes arise. Whether you need contracts or internal policies that address AI-related concerns, or you’re facing litigation tied to your use of AI, we provide experienced legal support.
If you’re using AI in business or facing legal questions about it, contact us today. We’ll help protect your interests and ensure your company operates on solid legal ground.
