IIT MADRAS STUDY FINDS SIGNIFICANT GAPS IN CONSUMER PROTECTION ACT REGARDING AI-INDUCED HARM

September 1, 2026

CHENNAI: A new working paper from the Centre for Responsible AI (CeRAI) at IIT Madras has highlighted major legal ambiguities in applying India's Consumer Protection Act 2019 to liability issues arising from artificial intelligence products and services.

Key Findings of the CeRAI Working Paper

·         Ambiguity in Causal Links: Authored by researchers including Balaraman Ravindran, the paper notes that while definitions of "harm" and "deficiency" under the 2019 Act are technology-agnostic and broad, proving a direct causal link or "defectiveness" in AI systems—such as automated errors or algorithmic biases—remains exceptionally difficult.

·         Fragmented Supply Chain Responsibility: The study points out that the statute's traditional categorizations of manufacturers, sellers, and service providers fail to cleanly capture the overlapping and distributed nature of modern AI ecosystems, which involve distinct layers of data providers, model developers, fine-tuners, and commercial deployers.

·         Challenges in Enforcement: The authors observe that unlike traditional consumer goods, AI features like "hallucinations" are often design characteristics rather than mechanical flaws, complicating regulatory scrutiny and accountability.

Recommendations and Context

·         Need for Regulatory Clarity: The paper suggests that specialized bodies—such as the Central Consumer Protection Authority (CCPA) and technology expert committees—must actively study these legislative overlaps and clarify enforcement standards.

·         Institutional Capacity: Researchers also recommended boosting technical capabilities within consumer forums and safety institutes to better navigate technology-driven disputes, testing the core premise of existing governance guidelines that rely on legacy laws for AI regulation.