What you need to know
- The FTC has launched legal actions against companies making false AI claims or offering easily misused tech.
- Its new initiative, Operation AI Comply, has revealed five cases of AI being used for shady practices, including a "robot lawyer," fake reviews, and sketchy online storefronts.
- For example, DoNotPay is under fire for claiming to have the “world’s first robot lawyer” that could sue anyone with a click.
The Federal Trade Commission is cracking down on deceptive AI practices and launched legal action against companies making false AI claims or offering tech that can be easily misused for fraud.
Operation AI Comply, the FTC's new program, has uncovered five cases where companies used AI to boost deceptive practices. These include a so-called "robot lawyer," AI-generated fake reviews, and shady online storefronts.
One case involves DoNotPay, which claimed to have the “world’s first robot lawyer” that could sue anyone with just a click. Now, the FTC is scrutinizing the company for not following through on its promises.
DoNotPay offered services like using a virtual card to dodge free trial fees and filing complaints against businesses. However, the FTC claims it exaggerated its capabilities, saying things like users could "sue for assault without a lawyer" and quickly create valid legal documents.
The FTC has called out DoNotPay for making baseless claims that its 'robot lawyers' could replace human lawyers in creating legal documents. DoNotPay had claimed it would "replace the $200 billion-dollar legal industry with artificial intelligence."
However, the FTC argues that DoNotPay had no evidence to back these claims. As a result, the company has agreed to a $193,000 settlement with the FTC.
The FTC is also going after companies that claimed AI could help people profit from online storefronts. One case involves Ascend Ecom, which supposedly misled individuals about their earning potential to lure them into investing in "risk-free" AI-driven business opportunities. The FTC claims Ascend Ecom didn’t honor its money-back guarantees when those investments didn’t pan out.
Besides the companies already mentioned, Ecommerce Empire Builders, Rytr, and FBA Machine are also being investigated by the FTC. The complaint against Rytr reveals that subscribers could use its AI platform to generate misleading fake reviews packed with false info that might mislead consumers. Some users ended up creating thousands of these questionable reviews.
Meanwhile, Ecommerce Empire Builders and FBA Machine tout that customers can cash in by investing in AI-powered online businesses. However, the FTC alleges that Ecommerce Empire Builders forces clients to sign contracts that stop them from leaving negative reviews.
