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Navigating California's Bot Disclosure Law: A Practical Guide for Businesses

The digital landscape is evolving, and so are the regulations governing it. California's Bot Disclosure Law (California Business and Professions Code § 17940) is a recent addition that businesses, irrespective of their location, need to be aware of, especially if they utilize bots in their customer service or sales operations. This blog post provides a concise, practical, and engaging guide to help businesses understand and comply with this law.





Understanding the Bot Disclosure Law:

California's Bot Disclosure Law primarily focuses on transparency, ensuring that consumers are aware if they are interacting with a real person or a piece of software. This law reflects California's commitment to regulating online business practices, aligning with other state laws like the California Online Privacy Protection Act (CalOPPA) and the California Consumer Privacy Act (CCPA), all aiming for greater transparency in online interactions.


Why the Law Was Passed:

The surge in sophistication among bots, thanks to advancements in artificial intelligence and machine learning, prompted concerns about their potential to influence consumers and voters. As technology continues to progress, the Bot Disclosure Law serves as a proactive measure to maintain transparency and accountability in online interactions.


Where Does the Law Apply:

While the Bot Disclosure Law is a California state law, its reach extends beyond the state's borders. It specifically applies to bots interacting with California consumers, regardless of whether the business itself is based in California. To avoid legal repercussions, businesses interacting with Californian consumers should ensure compliance.


Penalties for Violating the Law:

Although the law doesn't specify penalties, violating it could fall under false advertising rules, potentially resulting in fines of up to $2,500 per violation. For businesses interacting with a considerable user base, these fines can accumulate swiftly. Compliance is the simplest solution to avoid legal consequences.


Defining a Bot:

The law defines a "bot" as an automated online account where the majority of actions or posts are not the result of a person. Bots serve various purposes, from facilitating transactions to offering customer support, with notable examples from Lyft, Mastercard, and Sephora.


Types of Bots Needing Disclosure:

The Bot Disclosure Law requires disclosure when a bot is used to incentivize a purchase or sale of goods or services in a commercial transaction or to influence a vote in an election. While the law provides clarity in some contexts, certain situations may require a cautious approach until enforcement actions or further guidance are established.


Exemptions for Certain Companies:

Surprisingly, the law exempts large companies, particularly "service providers of online platforms," from the disclosure requirement. An "online platform" is defined as having 10 million or more unique monthly U.S. visitors, creating a threshold that only the most popular websites meet.


Making a Compliant Disclosure:

A compliant disclosure under the Bot Disclosure Law should be clear, conspicuous, and reasonably designed to inform users that they are interacting with a bot. Following the Federal Trade Commission's guidelines on online advertising, businesses should ensure that their disclosures are placed prominently, are easily understandable, and avoid overly technical language.


Proactive and Conspicuous Disclosure:

The law mandates proactive disclosure at the beginning of each interaction with a user. Disclosures must be clear and conspicuous within the text of the bot's chat, meeting the standards set by the FTC. Repetitive disclosures may be necessary for prolonged interactions or across multiple visits.


Being Fully Transparent:

In addition to the proactive disclosure, businesses should ensure that their bots respond appropriately when asked if they are a bot. Being fully transparent about the use of bots enhances customer relations and establishes trust.


Conclusion:

California's Bot Disclosure Law underscores the importance of transparency in online interactions. As businesses increasingly utilize bots, understanding and complying with this law become paramount. By proactively disclosing bot interactions and being fully transparent, businesses can navigate the complexities of the Bot Disclosure Law and foster positive customer relations.



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