The New York City Department of Consumer and Worker Protection is advancing new regulations aimed at curbing frustrating experiences caused by automated customer service chatbots and voice systems. The proposed rules would require companies to disclose when customers are interacting with artificial intelligence (AI) tools and ensure easier access to human representatives.

Commissioner Samuel A.A. Levine detailed his personal encounter with a hotel billing issue, which was initially handled by a chatbot that failed to resolve the matter. Levine said the experience highlighted a broader problem he regularly hears from New Yorkers, who face convoluted automated systems when trying to address consumer issues such as returns, subscription cancellations, or fraud recovery. These automated interfaces, designed in many cases to delay or deter customers from obtaining real help, have contributed to a significant level of consumer frustration.

Levine emphasized that AI-driven customer support is increasingly becoming the first—and often only—point of contact for consumers, with serious consequences. Reports estimate that deceptive subscription practices and scams facilitated through such means cost Americans nearly $19 billion annually. A global study revealed that approximately 20% of consumers find AI customer service ineffective, describing these systems as “artificial” rather than intelligent.

In response, New York City’s proposed regulations would impose fines ranging from $525 to $3,500 per violation on companies whose automated services mislead consumers, trap them without real assistance, or feign support. The city’s population of roughly 8.6 million residents amplifies the potential impact of these rules.

Several states, including California, Maine, New Jersey, and Utah, have already adopted laws requiring companies to disclose chatbot use. New York’s initiative represents some of the strictest measures to date, seeking greater transparency and accountability. The Department of Consumer and Worker Protection plans to solicit public feedback on the proposal before finalizing the rules ahead of the upcoming holiday season, when the deployment of chatbot assistants by retailers traditionally surges.

While federal lawmakers have largely refrained from direct intervention, some industry stakeholders advocate countering commercial chatbots with AI-powered digital assistants acting on behalf of consumers. However, Levine suggested that this approach places consumers at a disadvantage, as it relies on algorithms to negotiate with algorithms.

The commissioner expressed hope that New York’s regulations will serve as a model for other jurisdictions, increasing financial incentives for companies to provide clear disclosure and genuine human support despite legislative gridlock at the federal level.

Ultimately, Levine resolved his billing dispute only after bypassing the chatbot and speaking directly with a person—underscoring his conclusion that human assistance remains essential in consumer service interactions.