New York City Sets Out Consumer Protections for AI-Powered Customer Service

New York City has proposed rules that would require businesses to disclose when customers are interacting with automated customer service and provide an easy route to a human representative.

The proposal, from the New York City Department of Consumer and Worker Protection (DCWP), is intended to address automated customer service systems that repeatedly fail to resolve consumer enquiries. If adopted, it would give the city authority to enforce these protections, making New York the first municipality in the US with this type of enforcement framework.

Mayor Zohran Mamdani, said:

“When corporations force you to fight your way through an endless doom loop of AI-generated responses to speak to another human being, they’re stealing your time, money, and patience. Whether you’re trying to resolve a problem with your bank, get a refund or return a package, you deserve access to real help. This rule makes clear: customer service cost-cutting can’t come at New Yorkers’ expense.”

What the proposed rule would require

The proposal would classify it as a deceptive and unconscionable trade practice for a business to suggest that customer service is available, then repeatedly and unreasonably fail to address a consumer’s enquiry—or respond only with irrelevant, unresponsive or erroneous information.

Specifically, the rule would:

• Require businesses to disclose when a customer is talking to an automated customer service system such as AI
• Require businesses to provide an easy offramp to speak to a human representative
• Prohibit businesses from evading responsibility for using AI that results in unlawful conduct
• Require businesses to actually offer meaningful customer assistance if it is advertised

Automated customer service systems can include both AI chatbots and telephone voice-response systems. The proposal cites Gartner research indicating that chatbots resolve between 17% of billing disputes and 58% of returns or cancellations.

Businesses found in violation could be required to provide restitution to affected consumers and pay civil penalties. The rule builds on DCWP’s subscription-trap regulations, which took effect earlier this year.

Enforcement and scope

DCWP enforces the New York City Consumer Protection Law, which covers unfair practices in the sale of consumer goods and services, including false advertising and offers with hidden conditions. A joint policy statement issued in September said the law also applies to representations made by chatbots and other agentic systems, and to the design, marketing, sale or deployment of AI-enabled products and services.

Deputy Mayor for Economic Justice Julie Su, said:

“Working people deserve customer service that actually delivers, not an endless barrage of automated chats, calls, and responses. The rule we’re proposing is common sense and puts people first—requiring easy access to real human help and holding corporations accountable.”

Industry Impact

If adopted, the rule could raise the bar for how customer-service automation is designed and governed, particularly for businesses serving New York City consumers. Companies may need to review chatbot disclosures, escalation paths, performance monitoring and complaint-handling processes, while treating poor automated service as a potential compliance issue rather than only a customer-experience problem.

The proposal may also influence policy discussions elsewhere in the US, though its practical impact will depend on the final rule, enforcement approach and how clearly businesses can distinguish between an automated system that supports service and one that obstructs access to meaningful help.