New York Bill Would Create Liability for Chatbot Proprietors Offering Professional Advice
The New York State Senate has advanced a significant bill that addresses the legal responsibilities of proprietors of artificial intelligence (AI)-powered chatbots. This proposed legislation aims to prevent these chatbot operators from providing substantive responses or advice that, if delivered by a human, would be considered the unauthorized practice of a licensed profession under the Education Law or the unauthorized practice of law under the Judiciary Law.
Definition of Proprietor
For the purposes of this bill, a proprietor is defined as any entity that owns, operates, or deploys the chatbot. Notably, this definition excludes third-party developers who merely license the underlying technology.
Key Provisions of Senate Bill (SB) 7263
First introduced in April 2025, SB 7263 introduces several critical provisions:
- It creates a private right of action for actual damages resulting from violations, including reasonable attorneys’ fees and costs in cases of willful violations.
- It mandates proprietors to provide clear, conspicuous, and easy-to-read notices informing users that they are interacting with an AI system rather than human beings.
- It stipulates that proprietors cannot waive or disclaim liability merely by disclosing that the chatbot is non-human.
Context and Rationale
The bill is framed as a necessary measure to ensure that professional advice is only provided by human professionals and not by AI or chatbots. This is particularly relevant given warnings from the American Psychological Association to the Federal Trade Commission about AI chatbots masquerading as therapists, potentially leading vulnerable individuals to harm.
While the effectiveness of the bill in achieving its goals remains under scrutiny, its approach aligns with New York’s longstanding commitment to professional licensure and restrictions on the corporate practice of professions.
Enforcement Mechanism
A notable departure from previous regulations is the enforcement mechanism outlined in the bill. It empowers civil lawsuits against chatbot proprietors for substantive outputs, removing the necessity for state regulators to act as the primary gatekeepers.
Broader Legislative Context
This legislation comes at a time when various states are grappling with the implications of AI technology. In conjunction with another law enacted on November 5, 2025, which requires operators of AI companions to address suicidal ideation, SB 7263 reflects a national trend of states experimenting with different regulatory measures, including AI transparency mandates and governance frameworks for AI systems.
Challenges Ahead
If enacted, the bill’s success will depend on how courts interpret and prove several key elements, such as:
- What constitutes a “substantive” response?
- Whether such a response is considered the “practice” of a profession.
- Who is classified as a “proprietor” amidst the complex landscape of AI ownership and responsibility.
Conclusion
Given New York’s established position on professional licensure and corporate practice, the sponsors of the bill are presenting it as part of a broader strategy to mitigate unlicensed digital practice. However, the practical implications may lead to increased litigation exposure for chatbot deployers, raising questions about the limits of regulating AI through a licensure-based approach.
As developments unfold, stakeholders will need to monitor the bill closely to understand its implications for the future of AI in professional settings.
