Indian Polity · Polity
A bank's automated advisory system recommends a high-risk investment portfolio to a consumer, falsely claiming it is 'Government Guaranteed'. The portfolio crashes, resulting in massive financial losses, and hidden brokerage fees are discovered. Evaluate the bank's defense that automated advice is not a 'service' and the dispute is restricted to market risks under the Consumer Protection Act, 2019.
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1AI errors are explicitly categorized as unavoidable structural deviations exempt from penal actions under recent banking laws.
- 2The bank is only wrong about the territorial jurisdiction, but market-related portfolio losses cannot be disputed under consumer law.
- 3The bank is incorrect; providing misleading safety assertions is an unfair trade practice, AI-driven advisory constitutes a 'service', and the consumer can file where they reside.✓
- 4The bank is correct on all points; market risk constitutes an absolute legal defense and AI systems are not legal entities.
Correct answer
The bank is incorrect; providing misleading safety assertions is an unfair trade practice, AI-driven advisory constitutes a 'service', and the consumer can file where they reside.
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