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Forget About Fake News, How About Fake People? California Starts Regulating Bots as of July 1, 2019

California SB 1001, Cal. Bus. & Prof. Code § 17940, et seq., takes effect July 1, 2019. The law regulates the online use of “bots” – computer programs that interact with a human being and give the appearance of being an actual person – by requiring disclosure when bots are being used.

The law applies in limited cases of online communications to (a) sell commercial goods or services, or (b) influence a vote in an election. Specifically, the law prohibits using a bot in those circumstances, “with the intent to mislead the other person about its artificial identity for the purpose of knowingly deceiving the person about the content of the communication in order to incentivize a purchase or sale of goods or services in a commercial transaction or to influence a vote in an election.” Disclosure of the existence of the bot avoids liability.

As more and more companies use bots, artificial intelligence, and voice recognition technology to provide customer service in online transactions, businesses will need to consider carefully how and when to disclose that their helpful (and often anthropomorphized) digital “assistants” are not really human beings.  In a true customer-service situation where the bot is fielding questions about warranty service, product returns, etc., there may be no duty. But a line could be crossed if any upsell is included, such as “Are you interested to learn about our latest line of products?”

Fortunately, the law doesn’t expressly create a private cause of action against violators. However, it remains to be seen if lawsuits nevertheless get brought under general laws prohibiting unfair or deceptive trade practices alleging failure to disclose the existence of a bot.

Also, an exemption applies for online “platforms,” defined as: “any public-facing Internet Web site, Web application, or digital application, including a social network or publication, that has 10,000,000 or more unique monthly United States visitors or users for a majority of months during the preceding 12 months.”  Accordingly, operators of very large online sites or services are exempt.

For marketers who use bots in customer communications – and who are not large enough to take advantage of the “platform” exemption – the time is now to review those practices and decide whether disclosures may be appropriate.

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About this Author

Ed Chansky, Greenberg Traurig Law Firm, Las Vegas, Intellectual Property Law Attorney
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Ed Chansky focuses his practice in the areas of intellectual property (particularly development, selection, protection and licensing of trademarks worldwide) and advertising, sales promotion, and trade-regulation law, including charitable promotions, cause-related marketing, sweepstakes, contests, gift cards, eCommerce, substantiation of advertising claims, social gaming, social media, and all aspects of unfair or deceptive trade practices in a wide variety of industries.

A trusted advisor to many national companies, Ed is a frequent speaker at...

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Ian Ballon is an intellectual property and Internet litigator who represents clients in copyright, DMCA, trademark, trade secret, right of publicity, privacy, security, software, database and Internet disputes and in the defense of data privacy, security breach, behavioral advertising, TCPA and other Internet-related class action suits.

Mr. Ballon, who splits his time between the firm's Silicon Valley and LA offices, is the author of the four-volume legal treatise, E-Commerce and Internet Law: Treatise With Forms 2d Edition, Thomson West 2012 Cum. Supp. and the earlier first edition, which has been cited in state and federal court opinions. He is also the author of The Complete CAN-SPAM Act Handbook (West 2008) and The Complete State Security Breach Notification Compliance Handbook (West 2009). In addition, Mr. Ballon serves as Executive Director of Stanford University Law School's Center for E-Commerce and previously served as an Adviser to the American Law Institute's Intellectual Property: Principles Governing Jurisdiction, Choice of Law, and Judgments in Transactional Disputes (ALI Principles of the Law 2007).

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