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Chile's SERNAC Circular: AI Rules for Consumer Protection

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As artificial intelligence becomes increasingly integrated into everyday consumer interactions, regulatory bodies worldwide are grappling with how to ensure fair play. In Chile, the National Consumer Service (SERNAC) took a proactive step in January 2022, issuing an Interpretative Circular that clarifies how existing consumer protection laws apply when businesses use AI systems.

What's changing

It's crucial to understand that SERNAC's Circular isn't a brand-new law. Instead, it serves as an authoritative interpretation of Chile's long-standing Consumer Protection Law (Ley N°19.496). This means that while no new penalties are created, non-compliance with these AI-specific interpretations can lead to investigations, corrective orders, and fines under the existing legal framework. For businesses, this is not a suggestion but a clear standard for compliance.

The core of the Circular revolves around several key principles designed to safeguard consumer rights in an AI-driven world:

  1. Transparency is Paramount: Businesses must clearly disclose to consumers when AI systems are involved in their interactions. This isn't just about stating that AI is present; it also requires informing consumers about the AI system's purpose and its role in decisions that affect them. Furthermore, companies must disclose the categories of data processed by these AI systems. This ensures consumers understand how AI is being used and what information it's leveraging.

  2. Robust Data Protection: The Circular emphasizes the need for strong data protection, especially concerning sensitive information. AI systems often infer consumer behaviors, preferences, and even vulnerabilities from data. SERNAC requires heightened scrutiny and protection for such insights, ensuring that personal data is handled responsibly and securely throughout its lifecycle within AI systems.

  3. Fairness and Non-Discrimination: AI systems, if not carefully designed and monitored, can perpetuate or even amplify existing biases, leading to discriminatory outcomes. The Circular mandates that businesses actively test for and mitigate biases within their AI systems. This means ensuring that AI-driven decisions are fair, objective, and do not lead to unfair treatment based on protected characteristics or other arbitrary factors.

  4. Respect for Freedom of Choice: Consumers must retain their autonomy. The Circular warns against manipulative designs or "dark patterns" that exploit consumer vulnerabilities or nudge them into choices they wouldn't otherwise make. AI systems should facilitate informed decision-making, not undermine it.

  5. Human Oversight and Redress: While AI can automate many processes, human oversight remains essential. Businesses must ensure that human intervention is possible for AI-driven decisions, particularly those with significant impacts on consumers. Crucially, clear and accessible mechanisms must be in place for consumers to seek remedies, challenge AI decisions, and resolve issues if something goes wrong.

SERNAC views AI-driven profiling as particularly sensitive, requiring heightened protection and scrutiny due to its potential impact on individual rights and choices. Businesses should be prepared to document their AI use, conduct impact assessments, and demonstrate bias testing to show compliance.

Who is affected

The SERNAC Interpretative Circular applies broadly to all Chilean providers that interact with consumers through artificial intelligence systems. This isn't limited to specific industries or company sizes; if your business operates in Chile and uses AI to engage with customers – whether for customer service, personalized recommendations, pricing, credit scoring, or any other consumer-facing function – this guidance applies to you.

This includes, but is not limited to, e-commerce platforms using AI for product suggestions, financial institutions employing AI for loan applications, telecommunications companies using chatbots for customer support, and even retail businesses leveraging AI for dynamic pricing or personalized marketing. The key determinant is the use of AI in a "relationship of consumption" (relaciones de consumo) with Chilean consumers. There are no explicit exemptions based on the scale of AI deployment or the size of the business, meaning even small and medium-sized enterprises (SMEs) must consider these requirements if they utilize AI in their consumer interactions.

Three things to do this week

Given the immediate effect of this Circular since January 2022, businesses should prioritize these concrete actions to ensure compliance:

  1. Audit AI Disclosure: Review all consumer-facing AI systems to ensure clear and prominent disclosure of AI involvement. This means explicitly telling consumers when they are interacting with an AI, not a human. This aligns with SERNAC's "Key Focus Areas" for transparency.
  2. Explain AI's Role: For every disclosed AI system, clearly inform consumers about its purpose and how it influences decisions that affect them. For example, if an AI recommends products, explain that it's based on past purchases. If it processes loan applications, explain its role in the initial assessment. This directly addresses another "Key Focus Area" regarding purpose and decision-making.
  3. Detail Data Categories: Provide consumers with information about the categories of data your AI systems process. You don't need to list every single data point, but broadly describe the types of information (e.g., browsing history, demographic data, purchase records) the AI uses. This is a third critical compliance item from SERNAC's guidance. Document these disclosures and explanations, making them easily accessible to consumers, perhaps in privacy policies or directly at the point of AI interaction.

Related context

Chile is actively developing its regulatory landscape around artificial intelligence, and SERNAC's Circular is one piece of a broader effort. Businesses should also be aware of other initiatives, particularly those related to AI use in the public sector, which often set precedents or indicate future directions for private sector regulation.

For instance, the Ministry of Science has issued an "Instructivo del Ministerio de Ciencia sobre uso de IA en el Estado" (MinCiencia instructive on AI use in government), which provides guidelines for public entities. Similarly, "Oficio Circular N° 711 — Lineamientos para el uso de herramientas de inteligencia artificial en el sector público" offers further guidance for AI tools in the public sector. These documents, while not directly binding on private companies, signal the government's overall approach to AI governance, emphasizing principles like transparency, ethics, and accountability.

For a comprehensive understanding of the evolving AI regulatory environment in Chile, consulting resources like the "Chile AI Regulation Overview" can provide valuable context and help businesses anticipate future developments.

Note: this article was drafted by AI - Google Gemini

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