Is it ethical for SMEs to use AI?

AI is already part of how many SMEs work – from answering customer questions to planning the next big campaign. But questions about the ethical implications of AI keep coming up. Can you use AI-generated images for marketing? Is it ok to let AI draft your blog posts? What about market research?

We look at the main AI ethical issues to be aware of, where the law draws the line, and how to navigate the grey areas.

What are the ethics of AI?

The ethical use of AI isn’t about ticking the legal box. It protects your reputation, keeps your customers’ trust, and avoids bad decisions that could seriously affect your business. AI brings speed, insight, and opportunity, but used without care and attention, it can bring risks you didn’t see coming.

Some of the most common business issues around the ethics of AI include:

• Data privacy

Lots of AI tools rely on business and customer data to deliver results, but AI isn’t exempt from data protection. If it’s using personal or sensitive details, mishandling them can quickly damage your trust and reputation.

• Bias and discrimination

AI typically learns from historical data, which isn’t always neutral. If the data is skewed, your output may be too – from unfairly filtering out job candidates to targeting ads in ways that exclude certain groups.

• Copyright and plagiarism

AI-generated content can mimic existing work so closely, it can infringe on copyright or intellectual property. Using something that’s dangerously similar to another business, can leave you exposed – even if it wasn’t intentional.

• Transparency

It might be tempting to pass off AI content as your own. But hiding the fact a chatbot answered queries or AI created your marketing visuals misleads customers and undermines your credibility.

• Environmental impact

Training and running AI models uses significant computing power, and takes a lot of space and energy. With climate issues in the spotlight, customers, investors, and partners may start asking tough questions.

• Accountability

AI can make mistakes. If it produces incorrect, misleading, or harmful output, it’s still your business that’s responsible.

Are there any legal considerations around using AI?

Always keep in mind that ethical and legal aren’t the same thing.

Ethics is all about good practice. The law sets out the bare minimum you need to do, so it’s important to know your legal obligations.

• Data protection

Data privacy laws differ around the world, but most share the same basics. You need consent to use customer data, you can only use it for the agreed purpose, and you must store it securely. Depending on the country, there may also be additional sector-specific rules, especially around financial services or healthcare.

• Intellectual property rights

If AI-generated content uses licensed images, music, or text, you must have the rights to use them. Passing off someone else’s work as your own – even by mistake – can result in large fines, reputational damage, and unwanted headlines.

• Mandatory disclosure

Some sectors like healthcare or public services may require you to disclose when AI has influenced or made a decision, especially if it impacts access to services or benefits.

• Consumer protection

Making false claims or passing off AI-generated reviews, testimonials, or content as human-made can be seen as false advertising or misrepresentation – putting you on the wrong side of advertising standards or trading regulations.

• Evolving legislation

AI-specific laws are emerging globally, such as the EU AI Act. Though laws are still catching up with the speed of AI development, expect more regulation in the years ahead.

How to use AI ethically

Knowing the risks is one thing, but what does that mean in practice? Here’s what to watch out for and how to handle AI responsibly.

• AI images or logos for business

Treat AI like any creative asset and carry out proper checks.

Start with a reverse image search. Free tools like Google Images or TinEye let you upload the image and see if anything identical or very similar exists online. For logos, search trademark databases such as UK IPO, USPTO or TM View in the EU to confirm your design isn’t already registered.

And don’t forget to read the small print. Some tools only give you a licence, or reserve the right to reuse your design. That may be ok for a social media graphic, but not if it’s at the heart of your brand.

• AI blog posts and content creation

AI can’t replace your own voice or expertise. Check every fact, make sure the content sounds like you, and set up a clear review process and ownership. And if you’re unsure about originality, run content through plagiarism tools like Grammarly.

• AI for customer service

Chatbots and virtual assistants are great for answering simple questions 24/7. But always clearly label bots at the start of any interactions so people know who (or what) they’re dealing with.

• AI for market research and data insights

Anonymise customer information first and strip out any identifiers that can be traced back to someone. Check the AI tool’s privacy policy too. Is data encrypted, how long is it stored, and is it ever shared with third parties? If it’s not clear, ask your provider directly.

• AI for HR and recruitment

Before you let AI shortlist candidates or score CVs or resumes, check how it’s making decisions. Test it regularly for fairness and always have someone make the final call.

• AI for marketing

AI can help you identify what content works best, fine-tune your targeting, and personalise campaigns. But don’t disguise AI-generated ads or testimonials as human. A short disclaimer in the footer, on the landing page, or alongside the content is usually enough.

• AI and sustainability

Measure your AI footprint, such as how often you’re using AI tools, how much data you’re storing, and your energy use. For the bigger picture, ask your providers if their servers run on renewables, what efficiency steps they take, and if they share sustainability information. A quick sense check of both sides shows you’re thinking about impact without over-complicating things.

Find out how AI can help your business

AI can support everything from content creation to customer service without damaging trust or crossing legal lines. But only if you use it with care. The balance is finding ways to work with AI that are ethical, transparent, and right for your customers.

For more AI insights, explore our guides on the common business problems AI can solve and finding the best AI assistants.

Want more advice on using AI in your business? Check out V-Hub Digital Advice.