AI Hype Risks Spark Rising Class Action Concerns

Australian shareholder lawsuits may soon target companies accused of misleading investors about their use of artificial intelligence.

Author

Pick & Scroll News
July 06, 2025

Australian shareholder lawsuits may soon target companies accused of misleading investors about their use of artificial intelligence. This follows a growing trend already emerging in the United States. While AI brings promises of innovation and efficiency, exaggerating its power or falsely claiming to use it could backfire and open companies up to legal or financial risks.


Class actions in Australia often reflect developments overseas. Legal analysts believe AI-related claims may become a key area of focus. In the US, some companies already face lawsuits for allegedly overstating AI capabilities in their products or marketing, or for claiming to use AI when still relying on manual processes. Although such cases have yet to be heard in Australian courts, experts believe it is only a matter of time. Investor and public trust are increasingly tied to corporate credibility in adopting new technologies like AI.


Competition law is another area under close watch. In the US, lawsuits related to monopolistic behavior rose sharply last year, with around 340 new cases covering sectors from tech to food. Large population numbers and financial incentives such as triple damages help drive this trend. While Australia does not have the same financial motivators, rising regulatory pressure and increased public awareness could lead to local growth in similar legal activity.


In Australia, workplace discrimination class actions are also gaining ground. Cases are emerging in sectors like mining and resources, where workers are linking individual harm such as sexual harassment to broader corporate policies or systemic failures. Legal experts see these claims as early in development and potentially difficult to prove, but they could bring significant impact if successfully argued.


Shareholder loss actions, which led the class action landscape in Australia until 2022, may return to prominence. After setbacks in prior court decisions, legal professionals believe there is now more guidance available to help structure these cases better. As a result, the door may be opening for a new wave of more precisely targeted filings.