German Higher Regional Court (OLG Hamm) Rules Chatbot Hallucinations Trigger Strict Unfair Competition Liability

In a landmark decision issued on May 12, 2026, the Higher Regional Court of Hamm (Oberlandesgericht Hamm - OLG Hamm) ruled that companies are strictly liable under § 5 of the German Unfair Competition Act (UWG) for misleading or false statements generated by their AI chatbots, commonly referred to as "hallucinations" (Case No. I-4 UKl 3/25).

The court established a vital legal precedent: an AI chatbot integrated into a company's website is not a "third party" but a direct extension of the business. Consequently, any statements made by the chatbot are directly attributable (unmittelbar zuzurechnen) to the company, regardless of whether the company provided correct training data or if the false output was entirely an unpredictable system error.

Because of the fundamental legal significance of this attribution question, the OLG Hamm admitted an appeal (Revision) to the German Federal Court of Justice (Bundesgerichtshof - BGH), making this the most highly anticipated AI liability case in German legal history.

Background of the Case: Dr. Rick & Dr. Nick

The case was brought by the Consumer Association of North Rhine-Westphalia (Verbraucherzentrale NRW) against Aesthetify GmbH, a medical aesthetics clinic operated by two popular media-personality doctors, "Dr. Rick" and "Dr. Nick."

The clinic integrated an AI-powered chatbot on its website to allow patients to book appointments and ask questions. When queried, the chatbot repeatedly hallucinated and declared the clinic's founders to be "specialists in plastic and aesthetic surgery" (Fachärzte für plastische und ästhetische Chirurgie) and "specialists in aesthetic medicine"—titles that do not legally exist under German medical chamber regulations and which the doctors were not authorized to hold.

The clinic argued that they should not be held liable because the chatbot had been trained on entirely correct data and the false titles were an unpredictable AI hallucination. The OLG Hamm rejected this defense, ruling that anyone who deploys an AI system for public commercial communication must bear full legal responsibility for its outputs.

Verbatim Quotes

"Der entscheidende dogmatische Schritt des Senats: Der Chatbot ist kein „Dritter“ im Sinne des Gesetzes. Die Ausgaben des Systems sind der Aesthetify GmbH unmittelbar zuzurechnen – unabhängig davon, ob der Chatbot ausschließlich mit korrekten Daten trainiert worden ist. Wer ein solches System in seinem Geschäftsbetrieb einsetzt und damit nach außen kommuniziert, übernimmt die rechtliche Verantwortung für dessen Äußerungen in vollem Umfang. Eine Exkulpation über den Einwand fehlerhafter KI-Ausgabe trotz korrekter Trainingsdaten scheidet damit aus." — SKW Schwarz Legal Analysis

"Das Verhalten des Chatbots sei unzulässig. Und auch, wenn er keinerlei fehlerhafte Datengrundlage an den Bot gegeben habe, sei der Betreiber für die Falschangaben seines eigenen Bots verantwortlich. Somit liege ein Verstoß gegen das Irreführungsverbot des Gesetzes gegen Unlauteren Wettbewerb vor." — Marie-Claire Koch, Heise Online

Broad Implications for Enterprise AI Compliance

The OLG Hamm's decision reflects a rapidly consolidating legal consensus in Europe that AI deployers cannot use the "black box" nature of AI to escape liability. This has immediate compliance implications across several legal domains:

• Contractual and Sales Liability: If a customer-facing chatbot misrepresents product specifications or prices, the company may be legally bound to those terms or face warranty claims under §§ 434, 437 of the German Civil Code (BGB).
• Data Privacy: Chatbots that hallucinate or provide incorrect information about data processing practices could violate the transparency mandates of Articles 13-14 of the GDPR, triggering liability under Article 82.
• Product Liability: With the revised EU Product Liability Directive (PLD) scheduled to take effect in December 2026, AI-generated outputs can be legally classified as "defective products," exposing developers and deployers to strict liability.