The New York City Department of Consumer and Worker Protection (DCWP) and Commissioner Samuel A.A. Levine proposed landmark reforms to ensure New Yorkers are not cheated of their time or money by shoddy automated customer service technologies, including AI chatbots. The rule requires businesses to provide timely and reasonable customer service and offer customers easy access to a human representative if that service falls short. When finalized, it would put an end to customer service “doom loops” that cause New Yorkers wasted time, prolonged consumer disputes, and financial harm.
Following the rule’s proposal on October 20, 2026, New Yorkers have 30 days for public comment. Upon adoption, New York would become the first municipality in the nation with the ability to enforce this type of consumer protection. The rule builds off DCWP’s historic regulations banning subscription traps, which took effect earlier this year.
“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,” said Mayor Zohran Mamdani. “This rule makes clear: customer service cost-cutting can’t come at New Yorkers’ expense.”
“Working people deserve customer service that actually delivers, not an endless barrage of automated chats, calls, and responses. The rule we’re proposing today is common sense and puts people first—requiring easy access to real human help and holding corporations accountable. This administration is fighting relentlessly to deliver a city we can afford, and we looking forward to hearing from New Yorkers during the public comment period,” said Deputy Mayor for Economic Justice Julie Su.
“Sometimes bad customer service is merely exasperating. Other times it’s all the difference between refilling a critical prescription, rehabilitating a student loan, or recovering a large refund. That’s why New York City is drawing a line against automated doom loops—proposing rules to ensure consumers have access to the meaningful customer service they expect,” said DCWP Commissioner Samuel A.A. Levine. “We are not waiting for Washington to come to the rescue of working people.”
“Customer service has been steadily hollowed out for decades, and AI chatbots further threaten to accelerate that decline. Chatbots can create the illusion of help while trapping consumers in endless doom loops of wrong answers and unresolved problems,” said Stephanie T. Nguyen, Senior Fellow at Columbia Law School's Center for Law & the Economy and former FTC Chief Technologist. “New York City's proposed rules make corporations liable for AI when it breaks the law and sends a simple message: customer service must meaningfully serve customers.”
“Bad customer service can violate consumer protection law, no matter the technology used to deliver it,” said Adam Teitelbaum, Senior Fellow at Protect Borrowers and former director of the Office of Consumer Protection at the D.C. Attorney General’s office. “New York City’s proposed rules put industry on notice that when companies offload customer service to AI, they are responsible for the consequences—while giving enforcers a clear framework and the tools to hold violators accountable. Other states and cities should follow.”
Proposed Chatbot Rule
DCWP’s proposed rule would codify that it is a deceptive and unconscionable trade practice for businesses to insinuate that customer service is available, only to repeatedly and unreasonably fail to address consumers’ inquiries, or to only respond to consumers’ inquiries with unresponsive, irrelevant, 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” often appear as AI customer service chatbots but can also include voice response systems on the telephone. While the use of artificial intelligence in customer service has accelerated in recent years, consumer satisfaction has not. Time and time again, research shows that these technologies fail to provide customer services. According to a report from Gartner—an information services advisory firm—chatbots’ ability to resolve customer service issues range from a low of 17% regarding billing disputes, to a high of 58% for returns or cancellations.
The proposed rule would give DCWP citywide enforcement ability over businesses who use automated customer service systems. Violators would be liable for restitution to harmed consumers and civil penalties, with fines starting at $525.
DCWP proposed this rule by publishing it in the City Record on October 20, 2026. Following the proposal, under the City Administrative Procedures Act (CAPA), stakeholders have a 30-day comment period, including a public hearing, in which to provide DCWP feedback and comments on the proposed rule. After the comment period, DCWP will review all submissions before the rule is finalized and adopted.
