A Regulatory Assessment of AI Performance Guarantees
Business attorneys Alex Selarnick and Greg Hoffnagle co-authored an article for The Computer & Internet Lawyer about warranties for artificial intelligence (AI)-enabled products. As companies modernize conventional warranties by leveraging technological solutions to analyze risk, business leaders should take note of the dangers of offering AI performance guarantees. Though they come with benefits including enhanced consumer trust and competitive differentiation, varying state laws on AI warranty programs – in particular surrounding the question of whether AI performance guarantees constitute "insurance" – can trip the unwary. Mr. Selarnick and Mr. Hoffnagle offer several practice pointers for companies, such as advising them to avoid making these programs look like insurance products, clearly defining an AI product's function and the scope of a performance guarantee, and ensuring compliance with applicable consumer protection laws. Their article provides a helpful tool for companies in the warranty industry facing new regulatory risks as a result of evolving technology.