Explained: Why Air Canada had to refund a customer misled by a chatbot

Canada's Civil Resolution Tribunal ruled that the customer was entitled to damages of $650.88 CAD as the airlines had to take accountability for its chatbot mistake

Air Canada found itself embroiled in controversy after a grieving passenger, Jake Moffatt, sought a partial refund due to misinformation regarding bereavement travel policies provided by the airline's chatbot in late 2022. Canada's Civil Resolution Tribunal ruled in Moffat's favour on February 14, ordering the airlines to provide a partial refund to Moffat. Here is everything you need to know about the incident and the final verdict.

What is a bereavement policy?

Many airlines in the United States and Canada offer "flexibility" on airfares in case of unexpected emergencies. Airlines may offer "bereavement fares" to immediate members of a family who are escorting a body on a flight or attending a funeral. Discounts may range from 5-25 per cent, depending on the airlines.

Bereavement policies can differ from airline to airline, as this is not a government mandate but part of social initiatives by a company. Over time, many carriers have also dropped this option from their policies.

What is Air Canada's bereavement travel policy?

To book bereavement travel, Air Canada requires travellers to contact the airlines by phone. Customers must provide the name of the dying or deceased family member and verify their relationship to the person. Additionally, customers will need to provide either the name of the hospital or residence, including the address and phone number and name of the attending physician, or the name, address and phone number of the memorial or funeral home, including the date of the service.

Within seven days of the travel, customers are also required to email the airlines with a document of proof of the imminent death or bereavement.

Air Canada chatbot incident

Following the death of Moffatt's grandmother, he turned to Air Canada's website for assistance in booking a flight to attend the funeral.

Moffat had spoken with a representative of Air Canada who said that each flight would cost them $380 but did not clarify if this would be applied retroactively. When seeking clarification on the website, the chatbot inaccurately advised him to book a flight immediately and apply for a refund within 90 days, contrary to the airline's policy.

A screenshot shared by Moffatt of the chatbot's instructions read, "If you need to travel immediately or have already travelled and would like to submit your ticket for a reduced bereavement rate, kindly do so within 90 days of the date your ticket was issued by completing our Ticket Refund Application form."

Relying on this information, Moffat purchased a one-way ticket for $794.98 (Canadian dollars) from Vancouver to Toronto, departing on November 12, 2022. A few days later, Moffat booked a return flight for November 18 for $845.38 CAD. A total of $1,630.36 CAD.

Despite Moffatt's efforts to claim a refund based on the chatbot's guidance, Air Canada refused, offering only a $200 CAD coupon for future travel, which he declined. Dissatisfied with this resolution, Moffatt pursued legal action, leading to a landmark case in Canada's Civil Resolution Tribunal.

Air Canada's defense

Air Canada attempted to distance itself from the chatbot's misleading information, arguing that it should not be held liable for the actions of the chatbot, which it deemed a separate legal entity. However, Tribunal member Christopher Rivers dismissed this defence, questioning why customers should be expected to double-check the information provided by different parts of the airline's website.

"There is no reason why Mr Moffatt should know that one section of Air Canada's webpage is accurate and another is not," the court document read.

Tribunal's verdict

In its ruling, the Tribunal ordered Air Canada to provide a partial refund to Moffat and additional damages to cover interest and tribunal fees.

The tribunal concluded that Moffat should have paid $380 CAD for each ticket, alongside the additional costs of taxes, security charges, and airport fees, making the total cost of each flight $474.23 CAD. As he had paid a grand total of $1,630.36 CAD, instead of $979.48 CAD, Moffat was entitled to damages of $650.88 CAD.

Future of Air Canada's chatbot

Air Canada's foray into AI-driven customer service began as an experiment to alleviate the burden on its call centre during flight disruptions. Chief Information Officer Mel Crocker told the Globe and Mail, that they envisioned the chatbot evolving to handle more complex customer service issues, ultimately aiming to automate tasks that did not require a human touch.

However, following the ruling, Air Canada's chatbot support appeared to be disabled on its website, raising questions about the airline's future use of AI technology in customer service.

This verdict by the tribunal also showed the importance of accountability in the digital age, where automated systems like chatbots play an increasingly prominent role in customer interactions.