New York City wants to make sure that when you call customer service and get stuck arguing with a chatbot, you have a clear way to reach an actual human being. The city's Department of Consumer and Worker Protection unveiled a proposed rule Tuesday that would require businesses to disclose when customers are dealing with an automated system, offer a straightforward path to a live representative, and face escalating fines if they don't.
Targeting the Customer Service 'Doom Loop'
The proposal, first detailed by Gothamist, covers both rules-based chatbots and AI systems used in customer service, and it would require those systems to provide help in a reasonable and timely manner. It would prohibit repeatedly directing consumers to unhelpful menus or feeding them irrelevant or incorrect information, according to Gothamist's reporting. As PIX11 put it, the rules are meant to eliminate “doom loops,” when customers are bounced from menu to menu trying to get substantive help.
Under the proposed rule, the Department of Consumer and Worker Protection would also require a one-touch option that lets customers connect with a human representative, according to Bloomberg Law. The agency's own rulemaking filing frames the effort as an attempt to prohibit deceptive or unconscionable trade practices tied to automated customer-service systems, per NYC Rules, and it would cover systems in which all or substantially all communication happens through technology rather than a person. The proposed policy relies on the city's existing consumer protection law, and it would apply to companies doing business in New York City even if they're based elsewhere, though it wouldn't reach companies under exclusive federal jurisdiction, such as airlines and national banks, per Bloomberg Law's report.
Penalties Start at $525 and Climb Fast
Violations would bring potential restitution for harmed consumers along with civil penalties starting at $525 per violation, Bloomberg Law reported. According to Gothamist, a first violation carries a $525 penalty, a second carries $1,050, and a third or subsequent violation carries $3,500. The agency's rulemaking page notes that companies would not be able to avoid liability for violating local laws simply by claiming that a particular technology caused or assisted the violation.
Department of Consumer and Worker Protection Commissioner Samuel Levine said companies have hidden behind technology to ignore customer complaints, stymie refunds, and avoid fixing building errors, according to Gothamist. He said AI could worsen the relationship between businesses and consumers, and that the proposal is meant to save people time and money while ensuring access to actual customer service. The agency's own announcement, posted on the NYC Department of Consumer and Worker Protection site, frames the rule as requiring businesses to provide timely and reasonable customer service and easy access to a human representative whenever automated service falls short.
Comment Period, Hearing, and a Model for Other Cities
Mayor Zohran Mamdani's administration has described the proposal as the first rule of its kind in the country, per Gothamist, and the proposed rule includes a transition period for companies to implement the required changes. The proposal comes with a 30-day comment period, and the agency is set to hold a public hearing on Nov. 19, according to Bloomberg Law. The rule's effective date depends on the volume of comments the agency receives, Gothamist reported.
Levine said he sees the proposed rule as a model for other cities and states, telling Gothamist that every jurisdiction should adopt something similar and that he wants the idea to spread. Mamdani, speaking at a Manhattan event, said the federal government is not doing enough to regulate AI, according to Gothamist's reporting.
Part of a Wider National Push
New York City's move lands amid a much broader wave of state-level activity. Legislators in 37 states introduced more than 120 bills proposing chatbot regulations, per the Future of Privacy Forum, and several states have already passed such regulations into law, according to the Future of Privacy Forum. The organization's research found that 18 state chatbot-specific laws are currently on the books, with most focused on disclosures, crisis protocols, and safeguards for minors rather than how the underlying AI models are built or tested. The group also noted that lawmakers are increasingly eyeing protections for other vulnerable users, including older adults.
California has gone further for large businesses specifically, enacting the Right to Human Customer Service Act, which applies to companies with more than $500 million in gross annual national revenue, according to legal analysis from the WBK Firm. That law requires covered businesses to provide a simple way for customers to request a human representative and to make a good-faith effort to connect them within 15 minutes, or offer an appointment within one business day; it takes effect January 1, 2027. Bloomberg Law also reported that California and New Jersey already have laws requiring companies to disclose when customers are interacting with an automated system.
The push for regulation arrives as public trust in artificial intelligence remains shaky. A Pew Research Center survey found that Americans, including younger adults, are deeply skeptical of AI, with more adults predicting a negative rather than positive impact on themselves and society, according to Pew Research Center. The same survey found that about half of U.S. adults now report using AI chatbots, up substantially from roughly a third in 2024, and that majorities believe AI is advancing too quickly and will put their personal information at risk.
