Is website chat legal? I have heard about lawsuits.
Chat itself is legal. The lawsuits are about wiretapping law — chiefly California’s CIPA — and they turn on whether your chat vendor is a service provider acting for you or a third party listening in for its own purposes.
There has been a real wave of claims under the California Invasion of Privacy Act against businesses running website chat, with statutory damages claimed per violation. The theory is that a vendor recording the conversation is an uninvited third party to it, and the cases that have gone badly for defendants mostly involve vendors who used conversation data for their own ends.
That is the distinction to ask your vendor about. A service provider processes the conversation only on your instructions, for your purposes, under a contract that says so. A vendor that mines conversations to train its own models, enrich profiles, or build an audience across all its clients’ sites is doing something else, and is a much harder thing to defend as "acting for you".
Our architecture is on the service-provider side of that line, and our processing addendum says so in the operative sections rather than in marketing copy: we do not sell or share the data, do not train models on it, do not combine it with anything from another source, and do not profile anybody across sites. No IP address is ever stored. The assistant states at the start of every conversation that it is an assistant, and a visitor can ask for a person at any point.
None of that is legal advice, and we are not your lawyers. If you sell into California you should have your own counsel look at your privacy notice and at whatever your vendors have you sign. What we can do is give you an accurate description of what actually happens to the data, which is the part most vendors will not put in writing.