OpenAI Faces GDPR Lawsuit Over AI Hallucinations Amid Growing Reputation Crisis

OpenAI has been sued in Norway after its chatbot ChatGPT generated a fabricated criminal record for a user, falsely claiming he murdered his children and was sentenced to 21 years. The false narrative included accurate personal details, prompting privacy‑law experts to argue it violates the EU General Data Protection Regulation’s accuracy requirement. OpenAI responded with a disclaimer about possible errors and announced that its model now searches the web for personal data, but critics say a disclaimer does not satisfy legal obligations.

At the same time, the company confronts a broader reputational backlash. Public sentiment toward AI has soured, with incidents such as a Molotov cocktail thrown at CEO Sam Altman's San Francisco home and anti‑AI protests at college graduations. OpenAI appointed Chris Lehane, a former White House operative, to lead global affairs and steer the narrative. Lehane says the firm must present a balanced view of AI’s promises and risks, citing policy proposals like a four‑day work week and AI‑labor taxes. Former employees have accused OpenAI of downplaying potential downsides, adding to the scrutiny the company faces from regulators and the public.