Artificial Intelligence, Consumer Harm, and Tort Liability: Emerging Legal Challenges in India

Abstract

Artificial Intelligence has transformed the delivery of goods and services across sectors such as healthcare, finance, e-commerce, transportation, insurance, and digital platforms. AI-driven technologies offer significant benefits by enhancing efficiency, accuracy, and consumer convenience. However, their increasing integration into consumer markets has also created new forms of harm arising from algorithmic errors, autonomous decision-making, biased outcomes, privacy violations, cybersecurity breaches, and product malfunctions. These developments challenge the traditional principles of tort law, which are primarily based on human fault, foreseeability, causation, and liability. The autonomous and opaque nature of AI systems complicates the identification of responsible parties, raising critical questions regarding the liability of developers, manufacturers, service providers, platform operators, and users. This study examines the emerging legal challenges associated with AI-induced consumer harm in India through the lens of tort law. It critically analyses the applicability of established tort principles, including negligence, strict liability, product liability, vicarious liability, and duty of care, in addressing harms caused by intelligent and autonomous systems. The research further explores the interaction between tort law and the Consumer Protection Act, 2019, the Digital Personal Data Protection Act, 2023, the Information Technology Act, 2000, and evolving regulatory initiatives concerning AI governance. Comparative perspectives from jurisdictions such as the European Union, the United Kingdom, and the United States are also examined to identify best practices and potential reforms. Adopting a doctrinal and analytical research methodology, the study evaluates statutory provisions, judicial decisions, policy documents, and scholarly literature to assess whether the existing Indian legal framework adequately protects consumers affected by AI-related harms. The research identifies significant gaps in accountability, transparency, explainability, causation standards, and compensation mechanisms, particularly where AI systems operate with substantial autonomy. The study concludes that India's current tort framework requires substantial adaptation to effectively respond to AI-enabled consumer injuries. It recommends the development of AI-specific liability principles, enhanced regulatory oversight, mandatory transparency and explainability obligations, clearer allocation of responsibility among AI stakeholders, compulsory risk assessment for high-risk AI applications, and stronger consumer redress mechanisms. By proposing a balanced framework that promotes technological innovation while safeguarding consumer rights, this research contributes to the evolving discourse on AI governance and tort liability in India.