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The Federal Trade Commission is cracking down on companies making big claims about AI.
On Wednesday, the FTC announced cases against four businesses the commission claims made “allegedly deceptive claims about AI-driven services” to market and sell their businesses. In addition, the FTC announced a settlement with another company that allowed users to create fake customer reviews using GenAI tools.
The batch of cases, part of an enforcement strategy dubbed Operation AI Comply—which is totally not a cheesy Steven Seagal flick—involves three companies that the FTC alleges promised profitable digital storefronts that never materialized. The commission also settled a case with the company DoNotPay, which offered legal services but, according to an FTC complaint, “did not conduct testing to determine whether its AI chatbot’s output was equal to the level of a human lawyer” and didn’t hire or retain attorneys.
“Some marketers can’t resist taking advantage of that by using the language of AI and technology to try to make it seem like their products or services deliver all the answers,” Julia Solomon Ensor, an attorney in the enforcement division of the FTC’s Bureau of Consumer Protection, wrote in a blog post announcing the cases.
The FTC also announced that AI writing company Rytr agreed to a proposed settlement over claims it sold a tool that it said could write and publish fake customer reviews for businesses. The proposed order “would bar the company from advertising, promoting, marketing, or selling any service dedicated to—or promoted as—generating consumer reviews or testimonials” in the future, according to a press release announcing the cases.
Long time coming? The FTC has been raising the alarm about AI-related business claims as interest in the tools have surged. Last year, FTC attorney Michael Atleson wrote a blog post reminding businesses to keep their “AI claims in check,” and two months later, FTC Chair Lina Khan told reporters that “If AI tools are being deployed to engage in unfair, deceptive practices or unfair methods of competition, the FTC will not hesitate to crack down.”
The Securities and Exchange Commission has also begun its own investigations into potentially false AI claims.
“Using AI tools to trick, mislead, or defraud people is illegal,” Khan said in the press release. “The FTC’s enforcement actions make clear that there is no AI exemption from the laws on the books. By cracking down on unfair or deceptive practices in these markets, FTC is ensuring that honest businesses and innovators can get a fair shot and consumers are being protected.”
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