New York City Sues Car Shopping Platform Over AI Chatbot Use

New York City is taking legal action against the popular online car shopping platform CarGurus. The New York City Department of Consumer and Worker Protection (DCWP) has accused the company of deceiving customers by advertising falsely reduced prices through the use of an artificial intelligence (AI) chatbot.

The DCWP alleges that CarGurus has hidden hundreds or thousands of dollars in additional fees, down payments, and trade-in requirements. DCWP Commissioner Samuel Levine stated that companies are responsible for the output of their AI chatbots. "When you’re a company that is employing an AI chatbot, you are responsible for the output of that chatbot," Levine said.

An investigation by the DCWP, which began in July 2022 and is ongoing, found that CarGurus violated the New York City Consumer Protection Law more than 2,000 times. City officials filed a lawsuit in New York State Supreme Court seeking a permanent injunction and civil penalties.

This enforcement action is part of a broader initiative by the Mamdani administration to crack down on hidden fees, commonly referred to as "junk fees," and ensure transparent pricing for consumers. CarGurus has responded to the lawsuit by rejecting the claims and stating its intention to defend itself vigorously, citing its track record of transparency in the car buying and selling industry.