At Dilendorf Law Firm, we focus on these important areas of AI Litigation:
- Payment & Fintech Platform Disputes
We represent clients whose accounts, holding both fiat and crypto assets, have been compromised due to inadequate AI-driven compliance and fraud prevention. Our team holds these platforms accountable when substandard safeguards lead to account takeovers and stolen funds.
- Healthcare & Medical Provider Data Breaches
We pursue legal action against hospitals, clinics, and other healthcare institutions that utilize AI solutions yet fail to prevent hacks and breaches of sensitive patient data. By addressing these lapses, we work to ensure that organizations meet the highest standards of data protection.
- Phone Carrier AI Misuse
When phone carriers employ AI systems for compliance and user authentication without proper oversight, it can lead to unauthorized access and privacy violations. We bring claims against carriers whose irresponsible AI practices expose customers to identity theft and other serious risks.
- Other Complex AI Misuse
From flawed AI algorithms causing large-scale data leaks to negligent deployment of cutting-edge tools, we handle a wide range of cases involving irresponsible AI usage. Our goal is always to secure justice for those harmed and to set precedent for safer, more responsible AI deployment.
Preventive Strategies for AI Integration
In 2024, the U.S. Department of the Treasury issued “Best Practices for Financial Institutions to Manage AI-Specific Cybersecurity Risks.”
It highlights how banks, fintechs, and other stakeholders use AI for fraud detection and cybersecurity. Many now consider advanced capabilities like Generative AI. The Treasury notes that current risk management structures can help but may need updating for complex AI tools.
The guidance flags deepfakes, synthetic identities, and sophisticated cyberattacks as top AI threats. Malicious actors can use AI to spot system flaws, create malware, or impersonate users.
Many institutions also leverage AI for better anomaly detection and automated threat response. They stress strong governance, data management, and human oversight—especially for Generative AI’s unpredictable outputs.
The Treasury also points out regulatory and practical issues. Larger institutions integrate AI into existing frameworks, but smaller banks face resource limits.
This could increase market imbalances. The guidance urges industry-wide data sharing and applauds efforts like FS-ISAC. It offers best practices: thorough risk assessments, vendor oversight, advanced authentication, staff training, and alignment with NIST frameworks.
Despite clear guidance from the U.S Department of Treasury and the NYDFS Cybersecurity Regulation (23 NYCRR Part 500) (“NYDFS Guidance”), many organizations rush to implement AI solutions, prioritizing speed and cost savings over robust security measures. Effective AI deployment requires:
- Thorough Risk Assessments:
Companies must continually evaluate how AI will interact with their existing security and compliance framework. Hasty integrations often ignore potential vulnerabilities, in direct conflict with NYDFS requirements for risk-based cybersecurity programs.
- Rigorous Data Governance:
Proper data handling, encryption, and access controls are essential to prevent unauthorized access—especially when AI systems process sensitive financial or personal information, as underscored by the 23 NYCRR Part 500 standards on secure data management.
- Vendor & Third-Party Oversight:
External partnerships can introduce significant risks if not properly managed. Organizations should vet AI vendors thoroughly, ensuring compliance with federal mandates and state regulations.
- Employee Training & Awareness:
Human error remains a leading cause of AI-related security incidents. Regular, targeted training helps personnel recognize and respond to threats like AI-driven phishing and social engineering, aligning with the NYDFS Cybersecurity Regulation’s emphasis on cybersecurity awareness.
- Robust Incident Response Planning:
A well-tested plan, complete with defined roles and responsibilities, accelerates recovery in the event of a breach or data theft. Unfortunately, many companies neglect these protocols, focusing instead on quick implementation—an oversight that directly contradicts New York State DFS guidance and federal executive orders designed to safeguard against emerging AI risks.
By adopting these strategies—and resisting the urge to “move fast and break things”—organizations can harness the power of AI without compromising compliance and security.
Contact Us
If you’ve experienced data breaches, stolen crypto, or other AI-related issues caused by substandard compliance or fraud prevention, reach out to us.
Our team at Dilendorf Law is here to help you navigate complex AI disputes and protect your interests. Call us today or use our online form to schedule a confidential consultation.
For detailed discussions about your AI legal concerns, please contact us Dilendorf Law Firm (212) 457-9797 or via email info@dilendorf.com to set up a consultation.
We keep up to date with the latest developments in AI technology and its regulations:
This Executive Order reaffirms the United States’ commitment to maintaining global leadership in artificial intelligence by removing barriers to American AI innovation. It revokes certain existing AI policies, clearing the way for swift action to strengthen U.S. competitiveness, human flourishing, economic growth, and national security. Within 180 days, key officials and agencies must collaborate on a comprehensive AI action plan aligned with these objectives. Additionally, all agencies must review, suspend, revise, or rescind any AI-related policies or directives that conflict with this new directive, while ensuring no new legal rights or benefits are created.
This New York State Department of Financial Services (DFS) guidance highlights how AI can both exacerbate and mitigate cybersecurity threats, especially in social engineering, data exposure, and supply chain vulnerabilities. It emphasizes that Covered Entities must use the existing DFS Cybersecurity Regulation framework (Part 500) to address AI-related risks, calling for robust controls such as risk assessments, third-party oversight, multifactor authentication, training, monitoring, and data management. At the same time, AI offers significant benefits for cybersecurity by automating detection, incident response, and recovery. Covered Entities should regularly review and update their cybersecurity programs to keep pace with these rapidly evolving AI threats.
The Treasury’s report, prompted by Executive Order 14110, provides an overview of the financial sector’s adoption of AI for cybersecurity and fraud prevention. Drawing on 42 interviews with banks, fintech companies, and technology providers, it underscores that while AI has been used for years in areas like fraud detection, institutions are now evaluating more advanced, emerging tools such as Generative AI. The report observes that existing risk management frameworks—especially those addressing IT, model, compliance, and third-party risks—offer a starting point for safeguarding AI deployments, yet many banks are proceeding cautiously, noting that newer AI technologies may require revised or additional controls.
Microsoft President Brad Smith joined a law professor and scientist to testify on ways to regulate artificial intelligence. The hearing took place before the Senate Judiciary Subcommittee on Privacy, Technology, and the Law. Regulatory ideas discussed included transparency laws and labeling products, such as images and videos, as being made by AI or not. How AI may affect workers’ jobs was also discussed and debated.
The potential benefits of AI are considerable. As the first-year report by NAIAC noted, “AI is one of the most powerful and transformative technologies of our time” and has the potential to “address society’s most pressing challenges.” But different applications of AI can pose vastly different types of risk, at different levels of severity and on different timescales, depending on the technology and context of deployment.
The framework lays out specific principles for upcoming legislative efforts, including the establishment of an independent oversight body, ensuring legal accountability for harms, defending national security, promoting transparency, and protecting consumers and kids.
“AI has beneficial uses in each of the sectors under the Energy and Commerce Committee’s jurisdiction, from innovation, data, and commerce, to healthcare, to applications in energy.
“This crucial Executive Order on AI is another important example of how the Biden-Harris Administration is leading the way in responsibly using emerging technologies to benefit the American people. Today’s action represents a comprehensive approach–grounded in key principles such as safety and privacy–to ensure that we can leverage AI to help government deliver better for the people we serve, while mitigating its risks.”
The AI revolution is not a strategic surprise. We are experiencing its impact in our daily lives and can anticipate how research progress will translate into real-world applications before we have to confront the full national security ramifications.
Participants acknowledged that if AI is deployed effectively and harnessed responsibly, it promises to drive inclusive and sustainable growth–reducing poverty and inequality, advancing environmental sustainability, improving lives, and empowering individuals in all societies across all stages of development.
