Why not everyone is cool with an FTC crackdown on deceptive AI tools

• The FTC is targeting companies that use AI tools or make claims about AI for deceptive practices.
• The crackdown includes firms selling AI tools for fake reviews or misleading services.
• But some experts fear the crackdown could stifle innovation.

The Federal Trade Commission is cracking down on companies that sell artificial intelligence tools it says harm consumers. But some experts and even some FTC commissioners fear the agency could do more harm than good.

The FTC said last week that it targeted five companies that used artificial intelligence “to supercharge deceptive or unfair conduct that harms consumers.”

One company claimed to sell AI “lawyer” services, and several companies misleadingly claimed to sell AI tools to help build online stores. Another company, Rytr, has offered an AI writing assistant since 2021. The FTC says the tool offers a feature that generates fake testimonials and reviews.

The FTC said in court documents that Rytr’s service can quickly generate an unlimited number of “authentic-sounding reviews” with minimal input from the user. The complaint says the tool’s “only likely use” is to post fake reviews that deceive consumers and “pollute the market with a lot of fake reviews.”

In August, the FTC announced it would seek more civil penalties against companies that use fake reviews to boost product or website traffic and strengthen regulations on similar practices.

“Consumers rely on reviews for fair and accurate information about products and services, and fake reviews can give consumers a false impression of the quality of a product or service,” the complaint said.

As annoying as fake reviews can be, not everyone is on board with the FTC’s crackdown.

Neil Chilson, head of AI policy at the Abundance Institute, a technology nonprofit and former acting chief technologist at the FTC, told Bloomberg that the action against Rytr is an “extremely aggressive” use of authority for the agency.

“I’m concerned about the effect it would have,” Chilson told reporters. “Legal uncertainty: ‘If someone does something bad with my product, will the FTC sue me?’

Commission members voted 3 to 2 along party lines to approve the action against the companies, with two Republican commissioners dissenting.

In her dissent, Republican Commissioner Melissa Holyoak wrote that misapplication of the law can stifle innovation and competition in all industries, “especially in evolving ones like artificial intelligence.”