FTC takes action against 5 AI companies under new initiative
Lina Khan speaks onstage during the Fast Company Innovation Festival 2024 in New York City on Sept. 19, 2024. The agency announced enforcement actions against five AI companies this week. Eugene Gologursky/Getty Images
Operation AI Comply spotlights allegedly fraudulent systems as a new FTC program to keep companies honest about their automated offerings.
The Federal Trade Commission announced new enforcement actions brought against five artificial intelligence companies Wednesday, part of a new initiative within the agency targeting deceptive conduct in the AI and machine learning industry.
As part of Operation AI Comply, the FTC actions were brought against five companies claiming to employ AI services in their products or operations: DoNotPay; Ascend Ecom; Ecommerce Empire Builders; Rytr; and FBA Machine.
The common denominator within these five companies is their purported false advertising claims related to their AI products that ultimately deceive customers.
“Using AI tools to trick, mislead, or defraud people is illegal,” said FTC Chair Lina Khan in a 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.”
The products sold by the business charged by the FTC in Wednesday’s announcement vary. FBA Machine, Ecommerce Empire Builders and Ascend Ecom all promised income generation through creating AI-enabled online storefronts; Rytr marketed itself as an AI writing assistant, including writing product testimonials and reviews; and DoNotPay marketed an AI-generated lawyer for quicker and more affordable legal services.
The FTC ultimately found the businesses either engaged in false advertising and failed to deliver what they promised or engaged in deceptive business practices.
“Claims around artificial intelligence have become more prevalent in the marketplace, including frequent promises about the ways it could potentially enhance people’s lives through automation and problem solving,” the release reads. “The cases included in this sweep show that firms have seized on the hype surrounding AI and are using it to lure consumers into bogus schemes, and are also providing AI powered tools that can turbocharge deception.”
Under Khan’s leadership, the FTC has spotlit fraudulent marketing in the growing AI sector, having taken aim at impersonation scamming earlier this year.
Recently, the FTC announced the winners of a contest for private companies and entities to submit software that will help identify synthetically-generated voice content and cloning systems.