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Incident · 2024 · Government (small-business advice)

NYC’s MyCity chatbot tells employers they can take workers’ tips

In March 2024, The Markup found that New York City’s MyCity chatbot told business owners they could take a cut of workers’ tips, that businesses need not accept cash and that landlords need not accept Section 8 vouchers. Each answer contradicts city or state rules. The city took the bot down in February 2026.

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What happened

The city launched the chatbot in fall 2023 to answer questions about running a business in New York. The Markup, with Documented and The City, tested it and found answers that, if followed, would lead businesses to break the law.

Money-related errors included saying employers could take a cut of tips, that no rule requires businesses to accept cash despite a 2020 city law, that there were no restrictions on residential rent despite rent stabilization, and that hiding funeral service prices was acceptable.

A city spokesperson said the bot was a pilot that “has already provided thousands of people with timely, accurate answers.”

What happened next

In January 2026, Mayor Zohran Mamdani called the bot “functionally unusable” and said it was costing the administration around half a million dollars. By February 4, 2026, the city had taken it down.

What would have stopped it

  1. Ground answers on legal obligations in a maintained rules database and cite the rule in each answer.
  2. Run a regression set of known legal questions (tips, cash acceptance, vouchers) before each release.
  3. Decline to say whether something is legal when no rule is retrieved, and link the agency instead.

Sources

  1. The Markup: NYC's AI chatbot tells businesses to break the law
  2. The Markup: Mamdani to kill the NYC AI chatbot

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