The US Federal Trade Commission (FTC) has sued five companies for using AI to deceive consumers in its “Operation AI Compliance.”
On September 25, the FTC officially launched the “AI Compliance Campaign” to crack down on companies that use artificial intelligence (AI) to commit fraudulent or unfair acts.
FTC announces crackdown on deceptive AI claims and schemes: https://t.co/NVPbM8QY9F /1
— FTC (@FTC) September 25, 2024
“It is illegal to use AI tools to deceive, mislead, or defraud people,” FTC Chairwoman Lina Khan said in the announcement. She added that “there is no exemption for AI from existing laws.”
FTC cracks down on AI abuse in business
The agency targeted five companies, including DoNotPay, Ascend Ecom, Ecommerce Empire Builders (EEB), Rytr, and FBA Machine. These companies are accused of using AI to create misleading services, products, and information, causing consumers to lose money and trust.
Ms. Lina Khan speaks to the press.
First, the company DoNotPay, which bills itself as “the world’s first robot lawyer,” was accused of failing to provide legitimate legal services.
The company promised to “file assault lawsuits without an attorney” and “create flawless legal documents in a short time,” but the FTC said those promises were not kept. As a result, DoNotPay agreed to pay $193,000 and inform customers of the limitations of its service.
Additionally, Ascend Ecom is accused of running a fraudulent online business scheme, promising that AI could help consumers earn significant passive income.
According to the lawsuit, the company defrauded consumers of more than $25 million.
Additionally, EEB was accused of making false promises about helping consumers build profitable e-commerce businesses using AI. The company’s promises of high earnings failed to materialize, leading to numerous complaints from consumers.
The FTC is seeking an injunction against Rytr for marketing an AI writing assistant that generates misleading consumer reviews, contributing to a market in misinformation. The agency is barred from offering similar products in the future.
Finally, FBA Machine, a scheme that promised guaranteed earnings through AI-powered online stores, was also sued by the FTC in June. The scheme is said to have cost consumers more than $15.9 million, and the case is still under investigation.
The FTC’s action marks a significant turning point in the regulation and oversight of AI technology. It demonstrates that the use of AI must comply with existing laws, and that businesses using AI must ensure transparency, honesty, and accountability to consumers.
According to experts, the FTC's move will have a major impact on the AI industry, encouraging businesses to develop and apply AI responsibly.
The FTC's active intervention in AI-related cases shows a growing trend of control over this field, aiming to better protect consumer rights in the era of technological development.
