# New York City proposes fines up to $3,500 for customer service AI chatbot loops

Digest AI · Policy & Regulation · published 2026-10-20T23:17:40Z

Canonical: https://digestai.news/story/new-york-city-proposes-fines-up-to-3-500-for-customer-service-ai-chatb

## Summary

New York City’s Department of Consumer and Worker Protection proposed rules on Tuesday that would require businesses using AI chatbots or automated phone systems to clearly disclose automation up front. The draft rules mandate that companies provide customers with a single-step route to reach a human representative, such as pressing zero or typing agent, complete with an estimated wait time. Failing to do so would carry fines ranging from $525 for a first violation to $3,500 for a third violation within two years.

The policy covers any system where communication substantially originates from technology rather than a person. Under the proposal, repeatedly routing consumers through irrelevant menus or delivering erroneous responses would be classified as a deceptive trade practice. The measure also eliminates technology as a legal defense, establishing that companies remain strictly liable for claims or errors made by automated tools, while obligating businesses to retain customer service logs for three years.

Because the regulation falls under New York City's Consumer Protection Law, it applies to any business dealing with New York City residents, regardless of where the company is headquartered. Public comments are open until November 19, 2026, when the city will hold a hearing before deciding on final implementation.

## Key points

- New York City proposed rules fining businesses up to $3,500 for trapping customers in automated chatbot or phone doom loops.
- Companies must disclose automated systems up front and offer a single-step option to reach a human with wait times.
- The rules apply to any business serving New York City consumers and mandate keeping compliance records for three years.

## Why it matters

The proposal makes New York City the first US city to legally require a direct human exit from automated customer support, setting a precedent that affects any national or global company interacting with New York consumers.

## Sources

1. [New York City wants to fine companies that trap you in AI chatbot ‘doom loops’](https://madrobot.blog/2026/10/20/nyc-mamdani-ai-chatbot-doom-loop-rule-human-customer-service-fines) (madrobot.blog, 2026-10-20)

## Cite

Digest AI, "New York City proposes fines up to $3,500 for customer service AI chatbot loops", 20 October 2026, https://digestai.news/story/new-york-city-proposes-fines-up-to-3-500-for-customer-service-ai-chatb

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