AI Transparency: When and How to Tell Customers You’re Using AI

AI transparency customers is becoming a real business question as AI gets embedded into daily operations: if your team uses AI, should your customers know? Some companies disclose everything, others say nothing, and most are unsure what’s appropriate. The truth is it’s not one-size-fits-all—it depends on how AI is used and what customers reasonably expect.

The answer isn’t one-size-fits-all. It depends on how you’re using AI and what your customers reasonably expect. Here’s a practical framework for making disclosure decisions.

The Core Principle: Don’t Deceive

Start with the foundational rule: never misrepresent AI output as coming directly from a human when the customer expects human interaction.

If a client asks to speak with your technical expert and instead receives responses generated by AI without human review, that’s deceptive. If they’re chatting with what they believe is a person but it’s actually a bot, that’s deceptive.

Deception erodes trust. Once clients feel they’ve been misled, rebuilding that trust is extremely difficult.

Beyond avoiding deception, disclosure decisions involve weighing transparency benefits against unnecessary complexity.

When Disclosure Is Required

Some AI uses require clear disclosure, either legally or ethically.

Chatbots and automated messaging. When customers interact with AI-powered chat systems, they should know they’re not talking to a human. A simple statement like “I’m an AI assistant. Would you like to speak with a team member?” is sufficient.

AI-generated recommendations in regulated industries. If your business provides advice in areas like finance, health, or legal matters, AI-generated recommendations may need disclosure. Consult industry-specific regulations.

Automated decision-making that affects customers. If AI is making decisions about customers—like credit approvals, pricing, or service eligibility—disclosure may be required under regulations like GDPR or state privacy laws.

When customers explicitly ask. If a client asks whether AI was used, answer honestly. Evasion creates suspicion.

When Disclosure Is Optional

Many AI uses don’t require disclosure, and adding it can actually create confusion.

AI-assisted content creation. If a human reviews and approves AI-drafted emails, proposals, or marketing content, disclosure is generally unnecessary. The human took responsibility for the final product.

Internal efficiency tools. AI that helps your team work faster—scheduling, research, data analysis—doesn’t require customer notification any more than other software tools do.

Spell-check and grammar assistance. AI-powered writing tools have been standard for years. Nobody expects disclosure that Grammarly helped clean up an email.

Back-office automation. AI that processes invoices, manages inventory, or handles other administrative tasks typically doesn’t need customer disclosure.

The Human Review Factor

Human review changes the disclosure calculation significantly.

When a human reviews, edits, and approves AI output before it reaches customers, the human has taken responsibility. The AI was a drafting tool, similar to templates or dictation software.

When AI output goes directly to customers without human review, transparency becomes more important. The customer is interacting with AI output, even if a human set up the system.

This is why human-in-the-loop isn’t just about quality control—it also simplifies disclosure decisions.

How to Disclose When You Need To

When disclosure is appropriate, keep it clear and simple.

For chatbots: “Hi! I’m an AI assistant here to help with common questions. I can connect you with a team member if you need personalized assistance.”

For automated emails: A footer note like “This message was generated with AI assistance and reviewed by our team” works when disclosure seems appropriate.

For AI-generated recommendations: “This recommendation was developed using AI analysis and should be reviewed with a qualified professional before acting.”

Avoid over-disclosure that creates unnecessary alarm. “WARNING: AI WAS USED IN THIS COMMUNICATION” sounds ominous and raises more concerns than it addresses.

Industry-Specific Considerations

Different industries have different transparency norms.

Home services. Most customers care about getting their problem fixed, not how your office drafted the estimate. AI-assisted proposals and communications typically don’t need disclosure if human-reviewed.

Wellness and medspas. Higher sensitivity around health information means more caution. Never use AI for treatment recommendations without clear disclosure and human oversight.

Professional services. Clients often pay for human expertise and judgment. AI assistance is fine, but don’t represent AI-generated analysis as your personal professional opinion without review.

Know your industry norms and client expectations. When in doubt, err toward transparency.

What Customers Actually Care About

Here’s what research and experience tell us about customer attitudes toward AI.

Most customers don’t care how you create content as long as it’s accurate and helpful. They care about outcomes, not tools.

Customers do care about being deceived. If they feel tricked into thinking they were talking to a human when they weren’t, they’ll be upset—even if the AI provided good help.

Customers increasingly accept AI as normal. The stigma around AI use is fading. Many customers expect businesses to use AI and don’t need constant reminders.

Data protection matters more than AI disclosure. Customers are often more concerned about how you protect their information than whether AI helped draft their service estimate.

Creating Your Disclosure Policy

Document your approach to AI transparency with these elements.

Categorize your AI uses. List how AI is used in your business and classify each use as disclosure-required, disclosure-optional, or no-disclosure-needed.

Create standard language. Develop approved disclosure text for situations that need it. This ensures consistency across your team.

Train your team. Make sure everyone knows the policy and can answer customer questions about AI use honestly.

Review regularly. As AI use evolves and customer expectations change, update your disclosure approach.

Frequently Asked Questions

Should we proactively tell customers we use AI?

For general AI assistance with human review, proactive disclosure usually isn’t necessary. For chatbots or automated systems where customers interact directly with AI, yes.

What if a customer is upset we used AI?

Listen to their concerns. Explain how AI was used and emphasize the human oversight involved. Most concerns stem from misconceptions about AI replacing human judgment entirely.

Are there legal requirements for AI disclosure?

Requirements vary by jurisdiction and industry. Some states and countries have specific AI disclosure rules. Consult with legal counsel if you’re unsure about your obligations.

Can transparency about AI be a competitive advantage?

Yes. Proactive, honest communication about responsible AI use can build trust. “We use AI to serve you better, with human oversight on everything important” is a positive message.

Need help developing AI transparency guidelines? The FS Agency helps businesses create clear, practical AI disclosure policies that build customer trust. Visit fsagency.co/ai-consulting to learn more.

Amber S. Hoffman

Founder & CEO, The FS Agency
Amber helps home service owners scale smarter through marketing, systems, and strategy — bringing years of leadership and franchise experience.