“FTC’s AI Crackdown” on Allegedly “Overhyped” Claims About AI
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October 5, 2024A recent post by Tonya Riley, Cassandre Coyer, and Justin Wise discusses FTC’s AI Crackdown Pushes Boundaries of Its Oversight Power (1) (bloomberglaw.com)(Sept. 27, 2024).
The article reports that the FTC’s “Operation AI Comply” involves an enforcement action targeted at five companies.
The Federal Trade Commission’s actions against companies it said were deceiving customers about the value of their AI tools exemplifies the agency’s efforts to rein in overhyped claims about the technology while also raising questions about its ability to stretch its enforcement powers.
Id. In one instance, “DoNotPay, which offers customers AI-powered legal services, settled with the agency for $193,000 over claims it misled users about how well its AI could replace a real lawyer.” Id.
The blog explains that:
The FTC’s enforcement actions weren’t surprising to those following the agency, multiple attorneys said, pointing to numerous public statements regarding AI. In 2023, Chair Lina Khan joined other agency leaders in affirming they would use existing laws to rein in AI harms, a refrain they have continued to repeat.
For example, “the commission launched an inquiry into how companies are using advanced algorithms and AI in their pricing decisions…. In February 2023, in light of the sudden public outburst of generative AI developments, the agency issued a business blog post warning companies to keep their ‘AI claims in check.’… The agency followed up with another blog post earlier this year warning companies against quietly changing their terms of service to collect more training data.” Id. (emphasis added).
The Bloomberg article suggests that: “While the FTC has so far primarily targeted scam companies with its enforcement sweep, attorneys say all companies should be assessing what claims they make about AI products.” Id.
This blog was initially posted on Electronic Discovery Reference Model.
UPDATE: Ben Miller, AI-Washing Enforcement Crackdown Set to Survive Trump Rollbacks (Bloomberg Law, Nov. 25, 2024). “Federal regulators anticipating drastic change under the second Trump administration are nonetheless poised to continue pursuing enforcement against companies making false and misleading statements about artificial intelligence, known as AI washing.”
