AI can have unexpected downside, and it can cost companies seriously.

Zillow Offers, the AI-powered service from Zillow (NASDAQ: ZG), was designed to make selling a home less stressful, generate automatic home-buying offers using its AI-powered Zestimate feature to evaluate a home, and transfer a cash payment within a few days. Unfortunately, Zillow has shut down the Zillow Offers business after having to write down its home inventory by $304 million, ostensibly because it overpaid for it. (CNN Business)

Zillow’s decision to shutter Zillow Offers raises questions on how much a business can rely on AI. Apparently, one problem with the homes Zillow bought were issues that AI cannot pick up – such as cracks or hidden maintenance problems. Another issue – the volatility in home prices that can cause a serious disconnect between the original Zestimate, the price paid, and the value at which Zillow can resell it.

One more business that placed greater than warranted reliance on AI is Eyebobs, an online eyewear retailer. The company had to settle a class action suit brought by visually impaired plaintiffs under the Americans with Disabilities Act claiming that the Eyebobs website was not accessible to those with poor vision.

Eyebobs used artificial intelligence software from Israeli startup AccessiBe that promised to make its site easier for people with disabilities to use. Unfortunately, according to the plaintiffs, the software didn’t work as advertised.

In its defense, Eyebobs said AccessiBe failed to respond to requests for meetings with its lawyers. “Eyebobs is no longer working with AccessiBe nor will we in the future,” the statement said.

U.S. Magistrate Judge Richard Lanzillo of the Western District of Pennsylvania said in his order:

“The proposed settlement commits Eyebobs to ensuring ‘blind or visually disabled individuals full and equal enjoyment of the goods, services, facilities, privileges, advantages, and accommodations provided by and through its digital properties. This commitment includes ensuring that ‘the U.S. portion of the website is accessible’ within 24 months of the effective date of the settlement agreement.”

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