Customer-facing AI chatbots, virtual assistants, and automated response systems. Here is what California businesses need to know in 2026.
California BOT Disclosure Act (B&PC §17940) requires disclosure when a bot communicates with a California resident to influence a sale or election. Penalty is up to $2,500 per violation.
State law does not replace federal law — you must comply with both. These federal rules apply to chatbot disclosure nationwide:
California's SB 942 — AI Transparency Act often includes size-based exemptions. Businesses with fewer than 25 employees may be exempt, but should verify thresholds. Always review the specific statute for employee count and revenue thresholds.
The key deadline in California is In effect now. The law is enacted and compliance is required by the deadline above.
California penalties for AI non-compliance: Up to $2,500 per violation. While enforcement is still developing, companies found non-compliant face civil penalties and potential litigation.
Federal law does not currently preempt state AI laws. California's SB 942 — AI Transparency Act applies independently of federal rules. Federal laws like ECOA, FCRA, and HIPAA also apply alongside state law — so you must comply with both.
Best practice: document all AI systems used, conduct an internal audit, implement required disclosures, and keep records for at least 3 years. For high-risk uses like chatbot disclosure, consider hiring an independent third-party auditor to validate compliance.
Take the free 4-question risk snapshot. See which laws apply, your risk level, and the first actions to take — no signup required.
Take the Free Assessment →