New AI chatbot laws in California and Colorado: what customer-facing small businesses should watch

Two US states have set new chatbot rules taking effect January 1, 2027, according to an October 19, 2026 analysis by Ashurst Perkins Coie. Colorado’s Chatbot Safety Act requires public-facing conversational AI to disclose that users are talking to AI. California’s AB 1609 targets very large businesses and bars presenting customer service chatbots as human. The comment period for Colorado’s proposed rules closes October 26, 2026.

This article explains what the new laws require and what customer-facing businesses should consider even if they are not directly covered.

What does Colorado require?

Colorado’s Chatbot Safety Act applies to operators of conversational AI services accessible to the general public that primarily simulate human conversation. This is broader than California’s focus on companion chatbots.

Covered operators must:

• Disclose that a user is interacting with AI
• Estimate the age of users
• Protect minors from sexually explicit content and design features that simulate emotional dependence
• Maintain self-harm response protocols
• Report annually to the attorney general

The law takes effect January 1, 2027. The Colorado Attorney General proposed rules implementing the statute, with the comment period closing October 26, 2026.

Violations are treated as deceptive trade practices under the Colorado Consumer Protection Act.

What does California require?

California’s AB 1609 applies to businesses above a very large revenue threshold. It focuses on customer service chatbots specifically.

Covered businesses cannot represent a customer service chatbot as human. They must disclose when a reasonable person is likely to be misled. They must also provide a way to reach a human agent, including a good-faith effort to connect a customer within 15 minutes or to schedule an appointment within one business day.

This law also takes effect January 1, 2027.

What this means for your business

Even where you are not covered, disclosing AI and offering a quick handoff to a human is becoming the standard expectation. Customers increasingly expect to know when they are talking to a machine.

For a dental office using a voice agent to answer calls, disclosure at the start of the conversation is straightforward. For an e-commerce chat widget, a clear label and an easy path to a human representative follows the same principle. For a home services booking line, the AI can say it is AI and offer to transfer to a person at any point.

None of this is legal advice. The question of whether a specific business is covered by a specific law depends on factors including location, revenue, and the nature of the AI deployment. Consult a lawyer for your specific situation.

Practical setup for customer-facing AI

Say it is AI in the first line. Whether by script, greeting, or label, make it clear from the start. This avoids misunderstandings and aligns with the direction of regulation.

Keep an easy path to a person. Customers should be able to request a human at any point. Make the option obvious rather than buried in a menu.

Log handoffs. Track when customers request a human and how long it takes to connect them. This data helps you improve the experience and demonstrates good faith if questions arise.

Frequently asked questions

I am in Canada. Does this affect me?

Only if you serve customers in those states. Businesses outside the US may be subject to US state laws when they provide services to residents of those states. The specifics depend on your business model and customer base. Ask a lawyer for your situation.

Does my AI receptionist need to say it is AI?

If you serve customers in Colorado after January 1, 2027, the Chatbot Safety Act likely applies if your AI answers public calls and simulates human conversation. In other jurisdictions, disclosure is increasingly the expected practice even where not required. For more on voice agents, see our guide to AI receptionists for small business.

What if I serve customers in multiple states?

The simplest approach is to apply the most stringent requirements to all customers. If you need to disclose AI in Colorado, disclosing to all customers costs nothing and eliminates complexity.

Review your customer-facing agent scripts

The Agent Opportunity Audit reviews customer-facing agent scripts, disclosure language, and handoff rules. If you are deploying voice or chat agents that interact with customers, the Audit ensures they meet current expectations and can adapt as regulations evolve.