July 2026
Key Takeaways for Clients
- AI does not change existing legal obligations.
- Organizations should evaluate the governance of third-party AI tools before regulators do.
- Legal, compliance, and business leaders should work together to document meaningful oversight of AI-assisted decision-making.
Earlier this summer, North Carolina Attorney General Jeff Jackson and a bipartisan coalition of state attorneys general announced a $7 million settlement with multifamily housing operator LivCor, LLC, resolving allegations involving algorithmic pricing software that aggregated nonpublic competitor information and influenced rental pricing decisions. Although the settlement arose in the multifamily housing industry, its significance extends well beyond real estate. It serves as another reminder that regulators are increasingly scrutinizing how organizations deploy AI-enabled and algorithmic decision-making tools, particularly those used in pricing and other competitively sensitive business functions.
AI Does Not Insulate Businesses From Existing Legal Obligations
A key theme in recent federal and state enforcement actions is clear: existing legal frameworks apply equally when business decisions are informed by automated systems.
Regulators have focused on organizations using software that can:
- Aggregate nonpublic competitor information to generate recommendations;
- Influence pricing, compensation, or other strategic decisions;
- Facilitate indirect information sharing among competitors;
- Create the appearance of coordinated market conduct; or
- Generate recommendations adopted without meaningful human oversight.
Under the North Carolina consent judgment, LivCor is prohibited from using revenue management software that relies on competitors’ private data, restricted from certain vendor-facilitated communications with competing landlords, and required to implement enhanced antitrust compliance measures. The broader lesson is straightforward: using AI or algorithmic tools does not eliminate responsibility for the decisions they influence.
Importantly, the enforcement action did not challenge the use of pricing software or AI-enabled tools generally. Rather, regulatory focused on allegations that the software incorporated competitors’ nonpublic information in ways that could reduce independent business decision-making and create antitrust risk.
Why This Matters Now
Although the settlement involved multifamily housing, regulators are increasingly examining AI-enabled decision-making across industries. Organizations using AI for pricing, hiring, workforce management, fraud detection, lending, customer interactions, and operational decision-making should expect continued scrutiny of how these systems are designed, trained, monitored, and governed.
Critical Questions Organizations Should Be Asking
Businesses increasingly rely on third-party vendors for pricing, forecasting, workforce management, compliance, and operational decision-making. Organizations should understand not only what a tool does, but how it generates its recommendations. Corporate leaders, legal departments, and compliance professionals should consider:
- Data provenance.
- Information barriers.
- Human oversight.
- Auditability.
- AI governance policies and procedures.
Immediate Steps Organizations Should Consider
- Inventory AI and automated decision-making tools currently in use.
- Review vendor agreements governing AI-enabled platforms.
- Confirm employees exercise meaningful independent judgment rather than automatically accepting system recommendations.
- Evaluate whether existing compliance policies adequately address AI governance.
- Assess whether documentation exists explaining how significant AI-assisted decisions are made.
AI Governance Is Becoming a Business Imperative
Many organizations have focused on AI’s productivity and efficiency benefits. Regulators, however, are increasingly focused on accountability, transparency, and oversight. Governance frameworks should address approved and prohibited uses of AI, vendor due diligence, data governance and privacy protections, human review requirements, documentation and audit procedures, and escalation protocols for AI-generated outputs that raise legal or compliance concerns. Similar issues are also emerging in employment, where regulators continue to scrutinize AI-assisted hiring, applicant screening, compensation, and workforce management tools.
Looking Ahead
The North Carolina settlement is one of several recent enforcement actions involving AI-enabled and algorithmic decision-making tools. At the time, related litigation involving RealPage and other market participants remains pending, demonstrating that the legal and regulatory landscape continues to evolve. State attorneys general, the Department of Justice, and the Federal Trade Commission continue to examine how AI and algorithmic systems affect pricing, employment, consumer interactions, and market competition.
Organizations that proactively assess their AI governance frameworks today will be better positioned to manage regulatory risk tomorrow. As AI becomes more deeply integrated into pricing, employment, compliance, and operational decision-making, legal oversight should evolve alongside technological adoption rather than after regulatory inquiries begin.
For questions regarding AI governance, regulatory compliance, internal investigations, employment-related AI issues, or technology-related risk management, please contact The Banks Law Firm.