Australian Privacy Watchdog Issues New Guidance for Businesses Using AI

Important Legal Update for Businesses Using AI

If your business uses or plans to use AI, there’s a key legal update that clarifies privacy compliance. The Office of the Australian Information Commissioner (OAIC) has released two new guides explaining how Australia’s existing privacy laws apply to AI. These guides help businesses understand what they need to do to stay legally compliant, especially with generative AI tools that handle personal data.

What Was the Old Rule?

Until now, there was uncertainty about how privacy laws applied to AI tools, particularly those that use personal information to train models. Businesses faced confusion about compliance steps and how to pick AI products that protect privacy. Without clear regulatory guidance, many organisations were unsure if their AI use was lawful or exposed them to privacy risks.

What’s Changed?

• Guide for Businesses Using AI Products: Explains privacy obligations when using AI tools and offers practical advice on selecting AI products that meet privacy standards.
• Guide for AI Developers: Details how privacy laws apply to developers using personal information to train generative AI models.

These guides set out the OAIC’s expectations and outline what effective privacy governance looks like in the context of AI.

What Does This Mean for Your Business?

AI tools shouldn’t be used just because they’re available. Businesses must:

• Assess privacy risks carefully before adopting AI
• Implement strong privacy protections
• Be transparent with customers about how their data is used in AI
• Ensure outputs generated by AI comply with privacy laws

If you’re using AI or planning to, these guides provide a clear framework, and the OAIC is prepared to enforce compliance.

What Should You Do Now?

Use this quick checklist to keep your business compliant:

• Review your current or planned AI use. Understand what personal information is processed.
• Read the OAIC’s new guides to grasp your privacy obligations and best practices.
• Work with legal or privacy teams to implement privacy governance measures such as risk assessments and data minimisation.
• Train staff on privacy risks related to AI and responsible data handling.
• Stay updated on privacy reforms, especially regarding fair and reasonable use of personal information.

Key Takeaways

• Existing privacy laws fully apply to AI; no special exemptions exist.
• The OAIC’s guides clarify how these laws operate with AI tools and development.
• Businesses must assess privacy risks and set up safeguards before using AI.
• Transparency and accountability are essential to maintain trust and avoid penalties.

Frequently Asked Questions (FAQ)

1. Do privacy laws apply to all AI tools?

Yes. Australian privacy laws cover any AI tool that collects, uses, or shares personal information. There are no exceptions just because the technology is AI.

2. What are the main privacy risks with AI?

Risks include accidental data leaks, using personal information without consent, AI producing inaccurate or misleading outputs, and failing to be clear with customers about data use.

3. How can my business comply with the new guidance?

Start by reading the OAIC’s guides. Conduct privacy risk assessments on your AI tools, secure personal data, train staff on privacy best practices, and be transparent with customers about AI use.

4. What happens if a business breaks the privacy rules?

The OAIC can investigate and enforce penalties, including fines. Breaching privacy laws can also damage your reputation and harm customer trust.

For legal professionals seeking to enhance their understanding of AI and privacy compliance, consider exploring specialized AI training resources such as those available at Complete AI Training.