What Happened
In November 2022, Jake Moffatt contacted Air Canada’s website chatbot to ask about bereavement travel policies. The chatbot told him he could book a full-fare ticket and apply for a bereavement discount retroactively within 90 days. This policy did not exist. Air Canada’s actual bereavement policy required passengers to apply before travel, and did not offer retroactive discounts.
Moffatt booked flights to attend his grandmother’s funeral, spending approximately $1,640 CAD. When he later applied for the bereavement rate, Air Canada denied his claim, stating no such retroactive policy existed. The airline argued that the chatbot was a “separate legal entity” responsible for its own statements, and that Moffatt should have verified information through the airline’s official policy pages linked elsewhere on the site.
Why It Matters
The British Columbia Civil Resolution Tribunal ruled in February 2024 that Air Canada was liable for all information on its website, including statements made by its chatbot. Tribunal member Christopher Rivers found it “remarkable” that Air Canada suggested customers should cross-reference chatbot answers against other parts of the website. The ruling established that a company deploying an AI agent cannot disclaim responsibility for that agent’s outputs. This case became a landmark precedent for corporate liability when AI systems interact directly with customers.
Lessons Learned
Companies deploying customer-facing AI must treat chatbot outputs as binding representations. The “it’s just an AI” defense does not absolve organizations of responsibility. Businesses need robust testing and guardrails to prevent chatbots from fabricating policies. When AI systems can make promises on behalf of a company, those promises carry legal weight regardless of whether a human approved them. Organizations should implement retrieval-augmented generation constrained to verified policy documents rather than allowing generative free-form responses about company policies.
Current Status
Air Canada was ordered to pay Moffatt $650.88 CAD in damages plus interest and tribunal fees. The airline reportedly updated its chatbot systems following the ruling. The case is widely cited in legal discussions about AI liability and has influenced how other companies approach AI-customer interactions. Multiple jurisdictions have referenced this case when developing AI accountability frameworks.