Texas businesses can be sued in 2025 for using AI tools in ways that violate state privacy rules, biometric consent laws, hiring regulations, or the Texas Deceptive Trade Practices Act (DTPA). The biggest risks come from AI-generated false claims, improper data collection, and automated decisions that impact consumers or job applicants.
Why AI Use Creates New Legal Exposure for Texas Businesses
Direct answer: AI creates liability because Texas law generally treats automated decisions and AI-generated statements as business actions. Even if a tool makes the error, your company is accountable for privacy violations, deceptive claims, discrimination, or improper data collection. 2025 enforcement trends show regulators tightening scrutiny on automated systems.
AI is not a legal shield. It is simply another way your business acts in the world. When it gets something wrong, Texas regulators and courts do not blame the software vendor first. They look to the business that deployed the tool.
AI increases exposure because it can:
- Process large volumes of sensitive data without any human noticing details.
- Generate text that may be inaccurate, misleading, or legally risky.
- Automate decisions that directly affect customers, employees, and applicants.
- Create digital records of promises or representations your team never intended to make.
If you’re using AI in marketing, hiring, customer service, sales, or contract workflows, these risks already apply to your company.
The Texas Laws Most Commonly Triggered by AI Misuse
Texas does not yet have a single, unified “AI Act.” Instead, several existing statutes apply directly to how businesses deploy AI tools. Understanding these laws is critical for any business that wants to grow with AI while avoiding costly disputes or litigation.
Texas Deceptive Trade Practices Act (DTPA) and AI-Generated Content
Direct answer: If an AI chatbot, ad generator, or sales tool makes misleading claims about your product or service, your business can be liable under the Texas DTPA—even when you did not intend the misrepresentation and even if the language came from software.
Imagine an AI-generated product description saying your service is “guaranteed” or “proven to save customers 40%.” If that claim is not accurate, it can qualify as a deceptive practice, even if no employee typed the words.
Risk triggers include:
- AI drafting marketing emails that quietly add performance guarantees.
- Chatbots promising refunds or warranties your company does not actually offer.
- AI scripts exaggerating features, results, or success rates.
- Automated statements about certifications, endorsements, or approvals you do not have.
The DTPA focuses on whether a consumer was misled, not whether the business intended to mislead. Automation does not change that core rule.
Biometric Privacy Issues with AI Tools (Facial, Voice, Image Data)
Direct answer: Texas biometric privacy rules generally require consent before collecting or analyzing voiceprints, facial scans, or other biometric identifiers. Many modern AI tools—from security systems to customer analytics platforms—can capture biometric data automatically.
Common examples include:
- Facial-recognition time clocks used for employee attendance.
- AI-powered security cameras that analyze faces and behavior.
- Call-center software that analyzes voiceprints, tone, or emotional state.
- Marketing tools that scan customer images or IDs for verification or profiling.
If your AI systems analyze a person’s face, voice, or unique physical traits, you may be handling biometric data. That typically requires clear, informed consent and careful control over how that data is stored, used, and shared.
AI in Hiring and HR: Where Discrimination Claims Arise
Direct answer: AI hiring tools that screen resumes, rank applicants, or evaluate interviews can unintentionally discriminate, creating exposure under Texas labor law and federal anti-discrimination statutes.
Examples of risk include:
- Automated resume filters trained on historical hiring patterns that favored one demographic group.
- Video interview platforms that score facial expressions, tone, or speech patterns.
- Ranking algorithms that consistently push certain groups down the list.
- Automated rejection decisions with no human review or appeal process.
Businesses using AI in hiring should review their processes with an experienced attorney. The Spencer Law Firm’s employment issues practice can help evaluate whether your automated tools create hidden bias or legal risk.
Data Collection & Consumer Privacy Requirements
Direct answer: AI tools often gather or analyze consumer data beyond what the business initially intended. If this happens without clear disclosure, it can create privacy and consumer protection issues under Texas law.
Real-world patterns include:
- AI logging customer support chat transcripts and using them for future training without customer awareness.
- “Free” AI tools that quietly collect and store customer email addresses or contact data.
- Systems that retain audio recordings or video footage longer than necessary.
- Predictive profiling tools that build behavioral models of customers without clear disclosures.
Many privacy problems arise not from a malicious plan, but from hidden settings inside AI platforms. A legal review of your technology stack can help identify where your current tools may be out of alignment with your privacy commitments.
