The Chatbot Risks You Need to Know About: Legal & Compliance Leaders Must Evaluate

Starting Story:

Imagine you're having a bad day at work. You're swamped with emails, your phone won't stop ringing, and your to-do list seems never-ending. Suddenly, a message pops up on your screen from what appears to be a chatbot, asking if you need any help. You gratefully reply, not realizing that you've just opened a potential can of worms for your company in regards to legal and compliance risks.

Chatbots are becoming increasingly popular in many industries, from customer service to healthcare. They're often touted as a solution for streamlining communication and support, but they also bring a new set of challenges. To ensure your company is prepared, legal and compliance leaders must evaluate the following six chatbot risks:

1. Data Security Risks

Chatbots typically collect and store a large amount of personal data, such as names, addresses, and email addresses. This information must be securely stored and protected from hackers and other malicious actors. If a chatbot's security is compromised, the company may be liable for any damages or loss of data.

2. Incorrect or Incomplete Responses

Chatbots are designed to respond to user inquiries based on programmed information. If the response is incorrect or incomplete, it can lead to confusion, frustration, and potentially harm an individual or business. For example, a healthcare chatbot giving out inaccurate medical advice could result in serious injury or even death.

3. Lack of Consent

Chatbots can collect data from users without obtaining proper consent. This can be a violation of privacy laws and result in legal action. To avoid this risk, companies must clearly define how and why data is being collected and obtained, and obtain consent from users before collecting any data.

4. Regulatory Compliance

Industries such as healthcare and finance are heavily regulated and require strict compliance with laws and regulations. Chatbots must be designed and programmed to comply with industry-specific and global regulations, such as the General Data Protection Regulation (GDPR) and the Health Insurance Portability and Accountability Act (HIPAA).

5. Brand Reputation

Chatbots are often a customer's first point of contact with a company, so their interaction can have a significant impact on brand reputation. If a chatbot is perceived as unhelpful or frustrating, it can lead to negative reviews and a loss of customer trust.

6. Lack of Human Oversight

While chatbots can help organizations save time and resources, they still require human oversight and management. Without proper oversight, chatbots can produce incorrect or inappropriate responses, or collect data inappropriately.

Quantifiable Examples:

A report by Forrester predicts that chatbot usage will soar to $2.6 billion by 2019. Additionally, a recent survey by LivePerson found that 37% of respondents said they used a chatbot to talk to a company in the past year, with 69% of millennials in the US preferring to interact with chatbots. With this rise in usage, it's important to be aware of the potential risks.

Practical Tips:

Legal and compliance leaders can take the following steps to evaluate and mitigate chatbot risks in their organizations:

1. Conduct a Risk Assessment

Evaluate the risks associated with current chatbot programs and document potential legal and compliance issues. This will help identify any gaps in protection and provide direction on how to address those factors.

2. Implement Proper Security Measures

Ensure that chatbot software complies with cybersecurity standards and regulations to prevent data breaches or other malicious attacks.

3. Regularly Review Chatbot Programs

Periodically evaluate chatbots' responses and interactions to confirm they reflect the correct information and comply with applied regulations.

Conclusion:

Companies that decide to incorporate chatbots into their business strategy must be aware of the potential legal and compliance risks. By taking preventative measures, legal and compliance leaders can avoid costly mistakes and protect their companies in the long term.

The six chatbot risks that should be evaluated include Data Security, Incorrect or Incomplete Reponses, Lack of Consent, Regulatory Compliance, Brand Reputation, and Lack of Human Oversight. Legal and compliance leaders that follow the practical tips of Conducting a Risk Assessment, Implementing Proper Security Measures, and Regularly Reviewing Chatbot Programs can mitigate these risks and successfully incorporate chatbots into their businesses.

References:

- Forrester Report: https://www.forrester.com/report/US+Chatbot+Market+Grow+by+More+Than+30%+Annually+Through+2021/-/E-RES138518

- LivePerson Survey: https://www.cmswire.com/customer-experience/37-of-consumers-used-a-chatbot-in-the-past-12-months-study-finds/

- General Data Protection Regulation: https://gdpr-info.eu/

- Health Insurance Portability and Accountability Act: https://www.hhs.gov/hipaa/index.html

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Article Category: Technology and Business.