With the introduction of the Keep Call Centers in America Act (KCCAA), businesses are facing a significant legal challenge. One of the most pressing issues? The potential for heavy fines tied to non-compliance with the new AI disclosure requirements. Under this law, companies must inform customers when they are interacting with AI during customer service interactions. Failure to do so could result in hefty penalties—up to $10,000 per day for each violation.
For Chief Legal Officers (CLOs), compliance attorneys, risk managers, and businesses in sectors like FinTech and healthcare BPOs, this law represents a serious legal and financial risk that must be managed carefully.
The Risk of Non-Compliance: $10,000/Day Penalties
Non-compliance with the KCCAA’s AI disclosure rule could result in significant fines. Under the new law, businesses must disclose to consumers when they are interacting with AI in customer service settings. If a business fails to provide this disclosure, it risks facing penalties that can escalate quickly. The law mandates fines of up to $10,000 per day for each violation.
This means that a company with multiple AI-driven interactions across its call centers or online platforms could see penalties add up fast, resulting in a devastating financial impact. For businesses already navigating tight margins, these fines could prove financially crippling if not addressed immediately.
The Legal Exposure: How Fines Can Escalate
The penalties for non-compliance are not just theoretical—they represent a real financial threat. Let’s break down the key aspects of these fines:
- Daily Penalties: Fines accumulate on a daily basis. For each day that a company is found to be out of compliance, the fine increases by $10,000. The longer the violation continues, the more significant the financial burden.
- Multiple Violations: If the company’s AI is used across multiple customer service interactions, each instance of non-disclosure could be considered a separate violation, leading to multiple daily fines. This increases the potential for exponential penalty escalation.
- Legal Exposure: The company’s legal exposure increases dramatically if AI disclosure is mishandled. Beyond the immediate fines, businesses risk losing customer trust, facing reputational damage, and enduring potential lawsuits from customers who feel misled by the lack of transparency.
The Compliance Challenge for BPOs and Tech Firms
For FinTech and healthcare BPOs, the stakes are particularly high. These sectors often rely heavily on AI in their customer service operations, and failure to comply with AI disclosure requirements could not only result in fines but could also lead to reputational damage and loss of customer trust.
For Chief Legal Officers, the challenge is twofold: ensure the business complies with the law and manage the risks associated with AI use. This requires a comprehensive compliance strategy that includes:
- Audit and Review: Conduct a thorough audit of all AI-driven interactions to ensure that disclosure is happening at every touchpoint. Review the systems and processes in place to guarantee that all interactions are in full compliance with the KCCAA.
- Transparent AI Use: Create clear, simple methods for informing customers when they are interacting with AI. This could involve scripting clear disclosures at the start of each interaction, ensuring that the process is seamless and transparent.
- Ongoing Monitoring: Ensure continuous monitoring of AI systems to quickly identify and address potential non-compliance issues. This includes regularly updating training for customer service representatives and AI systems to ensure that disclosures are accurate and compliant.
Conclusion:
As AI becomes deeply embedded in customer service and business operations, disclosure is no longer optional—it’s enforceable. The threat of daily fines underscores how seriously regulators view transparency and consumer trust. Organizations that proactively align their AI use with disclosure requirements won’t just avoid penalties; they’ll be better positioned to build credibility, resilience, and long-term customer confidence in an increasingly automated world.
FAQS
1. What is the $10,000-per-day AI penalty?
It refers to potential daily fines imposed on companies that fail to properly disclose the use of AI or automated systems as required under the new federal law.
2. What counts as mismanaging AI disclosure?
This can include failing to inform customers they are interacting with AI, providing unclear or misleading disclosures, or lacking proper documentation and audit trails.
3. Who is most at risk under this new law?
Businesses using AI in customer service, outsourcing, fintech, healthcare, and other regulated industries—especially those with automated customer interactions—face the highest compliance risk.
About Splace BPO
Splace BPO empowers brands by providing offshore professionals who are not only highly skilled but also trained to excel in an AI-driven business landscape. By combining human expertise with future-ready capabilities, we help businesses scale smarter, adapt faster, and stay competitive in a rapidly evolving market.
📧 info@splacebpo.com
🌐 www.splacebpo.com
