- FTC launches Operation AI Comply to combat AI-driven deceptive practices and protect consumers.
- DoNotPay settles with FTC, paying $193,000 for misleading claims about its AI-powered “robot lawyer.”
- FTC cracks down on AI fraud, targeting companies like Ascend Ecommerce and EEB for false promises of passive income.
The Federal Trade Commission (FTC) recently announced the start of a new enforcement campaign named Operation AI Comply to tackle companies that are using artificial intelligence for unfair and misleading activities. The shift comes at a time when AI products and services are becoming more common, with firms using the technology to capture consumer attention.
According to a recent report, some of the high-profile cases that were targeted in the sweep include DoNotPay, a company that described itself as the ‘world’s first robot lawyer’. The FTC alleged that DoNotPay advertised that the AI tool it offers could stand in for human lawyers to help consumers in areas of law such as small claims, contract and even personal injury cases.
FTC Settlement With DoNotPay
However, the company’s AI could not live up to these expectations and left users with no effective legal help. In a settlement with the FTC, DoNotPay will have to cough an amount of $193,000 and make sure to tell its customers about the service’s shortcomings.
FTC Chair Lina M. Khan pointed out that the agency will not allow AI to be used for misleading consumers. “Using AI tools to trick, mislead or defraud people is unlawful,” added Khan.
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.
Another case is the one of Ascend Ecommerce that has been accused of fraudulating consumers and withdrawing millions of dollars from their accounts through selling AI-generated websites for passive income streams. The Federal Trade Commission complaint alleges that Ascend collected as much as $20,000 from consumers to start these stores, but did not produce the expected returns. A large number of consumers were stranded with debts, and no returns on their investments.
The Federal Trade Commission also acting against Ecommerce Empire Builders (EEB) that scammed consumers for as much as $35,000 for AI-driven e-commerce businesses that never made money as advertised. This happened because the company’s claims that customers could make millions through the use of its AI tools were quite unripe; customers incurred losses.
Operation AI Comply is the FTC’s efforts in safeguarding consumers from AI related frauds and scams. The agency’s stance is that, as AI becomes more relevant, it will not tolerate companies using the technology to defraud the public. Through the promotion of transparency and accountability, the Federal Trade Commission seeks to foster a more equitable market environment for consumers and companies.
