New York City’s Department of Consumer and Worker Protection (DCWP) proposed a first-in-the-nation rule on AI customer service on October 20, 2026. The rule would make it a deceptive trade practice to advertise customer service while answering only with irrelevant or wrong information. That is a familiar problem for borrowers who have dealt with servicer errors like MOHELA’s false past-due notices.
Businesses would also have to disclose when a customer is talking to an automated system, including phone menus, and give an easy way to reach a person. Violations could bring restitution and civil penalties starting at $525.
The proposal builds on a legal brief from Columbia Law School’s Center for Law and the Economy and Protect Borrowers arguing that companies are liable for their chatbots the same way they’re liable for human agents. Regulators have held servicers accountable for call center conduct before, including when the CFPB banned Navient from federal loan servicing in a $120 million settlement.