Summary
Legal Precedent: The landmark Air Canada case established that companies are fully liable for all content generated by their AI systems, including translation errors.
Key Risks: Relying on unchecked AI translation exposes businesses to significant legal dangers such as false advertising, content liability, copyright infringement, and data security breaches.
Essential Safeguard: The single most effective way to mitigate these risks is to implement a "human-in-the-loop" workflow where a professional linguist reviews and corrects all AI-generated translations.
Secure Solution: For sensitive legal or financial documents, using an industry-tuned tool like Bluente's AI Document Translation Platform reduces errors and protects confidentiality, unlike generic translation services.
You've launched your client's multilingual website, expecting praise for the quick turnaround and budget savings from using that cutting-edge AI translation tool. Instead, you wake up to frantic messages: overnight, their Spanish-language page accidentally advertised "all products for free today" due to a mistranslation. Now customers are demanding free merchandise, threatening legal action, and your client is looking directly at you for answers.
This scenario isn't hypothetical—similar situations have already happened, creating real legal and financial consequences for businesses relying on unchecked AI translations.
While AI translation tools offer impressive speed and cost savings, they also create significant legal vulnerabilities that many developers, agencies, and their clients don't fully appreciate until it's too late. The reality is stark: companies are legally responsible for all content on their websites and materials, even when errors originate from AI systems.
In this article, we'll examine the landmark Air Canada case that established this precedent, explore the specific legal risks created by unchecked AI translations, understand why these systems fail, and provide actionable strategies to protect both your business and your clients.
The Tipping Point: How Air Canada's Chatbot Created a Legal Precedent
In 2022, passenger Jake Moffatt consulted Air Canada's website chatbot about obtaining a bereavement fare for a flight he needed to book after a family member's death. The AI chatbot incorrectly informed him that he could apply for the discount after purchasing a full-fare ticket.
Following the chatbot's guidance, Moffatt bought the expensive ticket, only to discover later that Air Canada's actual policy required applying for bereavement fares before purchase. When he sought reimbursement for the difference, Air Canada refused, arguing a remarkable defense: the company claimed it was not responsible for information provided by its chatbot, suggesting the AI was a "separate legal entity."
This defense failed spectacularly. The British Columbia Civil Resolution Tribunal firmly rejected Air Canada's argument, ruling that the company was fully liable for all information on its website—including that provided by automated systems. The tribunal ordered Air Canada to pay Moffatt CAD 812.02 in damages and fees.
This case established a critical legal precedent: businesses cannot disavow responsibility for AI-generated content. The technology you deploy represents your brand and creates binding obligations—regardless of whether a human reviewed the output.
The Hidden Legal Minefield of Automated Translation
When it comes specifically to AI translation, the potential legal risks extend far beyond simple customer confusion. Here are the primary areas of legal exposure that should concern any business using automated translation services:
False Advertising & Misrepresentation
Inaccurate translations of product descriptions, pricing, terms of service, or promotional offers can quickly become false advertising issues. When an AI mistranslates "50% off select items" as "50% off all items" in another language, it creates a legally binding offer in many jurisdictions.
Regulatory bodies like the FTC take false advertising claims seriously, with penalties that can reach millions for larger companies. Even for smaller businesses, the combination of refunds, legal fees, and reputation damage can be devastating.
Content Liability: Defamation and Inaccuracy
Beyond advertising claims, businesses can be held liable if AI-translated content contains defamatory, misleading, or simply incorrect information that causes harm to others. This is particularly concerning with technical or legal content.
For example, misinterpreting terms like "usufruct" (a legal right to use someone else's property) or mistranslating crucial clauses in terms of service could lead to unenforceable agreements or even lawsuits from affected parties. Translation industry experts warn that even seemingly minor errors can have major legal consequences.
Copyright Infringement & Ownership Gray Areas
Many users don't realize that AI models train on vast datasets that often include copyrighted materials without explicit permission. This creates a risk that AI-generated translations might inadvertently reproduce protected content.
The consequences of copyright infringement can be severe: statutory damages up to $150,000 per work, court injunctions, and substantial legal fees. Additionally, in the United States, fully AI-generated content may not qualify for copyright protection at all, potentially leaving your translated materials in the public domain.
Breach of Confidentiality and Data Security
When you run sensitive legal documents, financial reports, or confidential business plans through public AI translation tools, you may be inadvertently exposing proprietary information. Many popular translation APIs and tools store inputs to improve their models—meaning your confidential content could become part of the system's training data.
This creates serious data security concerns, particularly for businesses handling information subject to GDPR in Europe, where non-compliance can result in fines of up to 4% of global annual revenue.
Why AI Fails: The Devil is in the Details
Understanding why AI translations create legal exposure requires looking beyond the "it's just a machine" explanation to the specific failure points in these systems:
The Complexity of Legal and Technical Jargon
AI systems struggle with context-specific terminology, particularly in specialized fields like law, finance, and medicine. Consider these real-world examples:
The German word "Gesellschaft" was incorrectly translated by an AI as "society" instead of the correct legal term "company" in a business contract.
Legal terms like "consideration" (the exchange of value in contract law) or "discharge" (release from obligation) have different meanings in different legal systems, which AI often fails to distinguish.
The ambiguous Spanish pronoun "su" could be translated as "his," "her," "your," or "their" depending on context—potentially creating major disputes over property ownership in a legal document.
Lost in Translation: Cultural Nuance and Context
Legal and business communication is deeply embedded in cultural context. AI systems often miss these cultural nuances, resulting in translations that may be technically correct but inappropriate or misleading in the target culture.
For international businesses, these cultural mistranslations can unintentionally offend potential customers or partners, violate local regulations, or create misunderstandings about product functionality or limitations.
When AI Lies: The Peril of "Hallucinations"
LLM-based translation tools are prone to what experts call "hallucinations"—generating content that simply doesn't exist in the original text. This can manifest as fabricated statistics in a translated report, nonexistent legal clauses inserted into a contract, or completely invented product features.
Because these hallucinations can be written in fluent, confident language, they're often difficult to detect without a native speaker comparing the source and target texts.
From Risk to Resilience: Actionable Strategies for Safe AI Implementation
Despite these risks, AI translation tools can still offer tremendous value when implemented with appropriate safeguards. Here's how to protect your clients and your business:
Implement a Human-in-the-Loop (HITL) Workflow
This is the single most crucial mitigation strategy. As one developer bluntly put it on Reddit: "I don't recommend automated translations, as it is very error prone. But if you really want, I suggest you to do proofreading afterwards."
Implement Machine Translation Post-Editing (MTPE)—a professional process where a human linguist reviews and corrects AI output to ensure accuracy, tone, and context. This creates a "Swiss Cheese Model" of protection, where multiple successive layers catch errors that might slip through any single layer.
For critical content like legal documents, terms of service, product descriptions, and marketing materials, human review isn't optional—it's essential risk management.
Choose the Right Tool for the Job
Not all AI translation tools are created equal. Generic public APIs might be fine for understanding an email, but they're inadequate for business-critical content.
For sensitive, high-stakes translations, consider specialized platforms like Bluente, which offers AI translation fine-tuned for industry-specific terminology in legal and financial contexts. With features like enterprise-grade security (including end-to-end encryption and automatic file deletion), and the ability to preserve original document formatting, such specialized tools significantly reduce both error rates and security risks compared to generic alternatives.
Establish Clear Contractual Protections
Developers and agencies should include clauses in client contracts that:
Specify the role of AI in the translation process
Detail the limitations of automated translation
Outline the review process that will be implemented
Require client approval for final translations before publication
Clarify liability assignment for content errors
This approach manages client expectations and establishes shared responsibility for quality assurance.
Develop Internal AI Usage Policies
Businesses should create clear internal guidelines on:
Which AI tools are approved for use
What types of content can (and cannot) be processed through AI
Mandatory review processes before publication
Documentation requirements for AI-assisted translations
Emergency protocols for addressing discovered errors
The Hybrid Future: AI Speed with Human Assurance
The optimal approach combines AI for speed and initial drafting with essential human oversight for accuracy, nuance, and final validation. This hybrid model allows businesses to realize efficiency gains without the unacceptable legal exposure of fully automated solutions.
For documents requiring official acceptance by courts, immigration authorities, or regulatory bodies, AI alone is never sufficient. In these highest-stakes scenarios, services like Bluente's Certified Translation provide officially certified translations performed exclusively by qualified human linguists, with notarization and legalization support available. This combines professional human accuracy with efficiency (24-hour turnaround) and predictable pricing ($25 per page), providing absolute legal assurance when it matters most.
Protecting Your Business and Your Clients
The Air Canada case serves as a clear warning: unchecked AI translation is not just a quality issue—it's a significant legal liability. As AI translation tools proliferate, the businesses that thrive will be those that implement a proactive approach pairing specialized AI with rigorous human oversight and clear contractual safeguards.
By treating AI as a powerful assistant rather than an autonomous expert, you protect both your clients and your own business from the substantial legal and financial risks of translation errors. In the rapidly evolving landscape of AI, this balanced approach isn't just best practice—it's essential risk management.
Frequently Asked Questions
Am I legally responsible for errors made by an AI translation tool on my website?
Yes, your company is legally responsible for all content on your website, including errors generated by AI translation tools. The landmark Air Canada case established that a company cannot claim it is not responsible for information provided by its AI systems. Courts view AI tools as representatives of your brand, meaning any inaccuracies, mistranslations, or misleading information they produce can create binding obligations and legal liability for your business.
What are the biggest legal risks of using unchecked AI translation?
The primary legal risks include false advertising, content liability (like defamation), copyright infringement, and breaches of data confidentiality. A simple mistranslation can turn a promotion into a legally binding offer you didn't intend (false advertising). Inaccurate translations of technical or legal content can lead to lawsuits. AI models trained on copyrighted data may reproduce protected content, and using public tools for sensitive documents can expose confidential information, violating regulations like GDPR.
Why is the Air Canada chatbot case important for AI translation?
The Air Canada case is important because it set a legal precedent that businesses are fully liable for the information provided by their AI systems, including chatbots and translation tools. In this case, a tribunal rejected Air Canada's defense that its chatbot was a "separate legal entity." The ruling made it clear that companies cannot blame the technology for errors. This precedent applies directly to AI translation, confirming that your business is responsible for any mistranslations and their consequences.
How can my business use AI translation safely?
The safest way to use AI translation is by implementing a "human-in-the-loop" (HITL) workflow, using specialized tools for specific industries, and establishing clear contractual protections with clients. An HITL or Machine Translation Post-Editing (MTPE) process, where a professional human linguist reviews and corrects AI output, is the most critical step. For sensitive content, use industry-tuned AI tools that offer better accuracy and security. Finally, your contracts should clarify the role of AI, outline the review process, and assign liability for errors.
When should I always use a professional human translator instead of AI?
You should always use a professional human translator for high-stakes documents that require official acceptance by legal, governmental, or regulatory bodies. AI translation is never sufficient for materials like court documents, immigration papers, official contracts, or financial reports that must be legally certified. For these situations, a certified translation performed exclusively by a qualified human linguist is necessary to ensure accuracy, legal validity, and acceptance by official institutions.
What is a "human-in-the-loop" (HITL) workflow?
A human-in-the-loop (HITL) workflow is a process where a human expert reviews, edits, and validates the output generated by an AI system. In the context of AI translation, this is often called Machine Translation Post-Editing (MTPE). A professional linguist checks the AI-generated translation for accuracy, cultural nuance, context, and tone. This hybrid approach combines the speed of AI with the precision and reliability of human expertise, making it the most effective strategy for mitigating legal risks.
This article includes insights from various sources including BBC Travel and Kelley Kronenberg.