FTC Announces Crackdown on AI’s Deceptive Claims and Schemes

The US Federal Trade Commission on Wednesday announced actions against five companies it said used artificial intelligence in deceptive and unfair ways.

Three of the cases suspended operations at businesses that claimed to help consumers generate passive income by opening e-commerce storefronts. The FTC also settled with a company called DoNotPay over its claim to provide automated legal services and with Rytr, an AI writing tool that the agency said offered a feature that allowed users to generate fake product reviews .

“Using AI tools to trick, mislead, or deceive people is illegal,” FTC Chair Lina M. Khan said in a statement. “The FTC’s enforcement actions make it clear that there is no AI exemption from the laws on the books.”

DoNotPay agreed to pay $193,000 and inform customers who subscribed to its service between 2021 and 2023 about the limitations of its legal feature.

Rytr agreed to stop providing review generation services, which the FTC said some subscribers were using to generate thousands of reviews through a tool to make “persuasive” or “critical” posts with little input of users.

Rytr and DoNotPay admitted no wrongdoing in the settlements. Their attorneys did not immediately respond to requests for comment.

The two cases illustrated the internal debate within the FTC over how the regulator should approach AI. While all five commissioners agreed that action should be taken against false claims about AI services, the two Republican commissioners criticized the action against Rytr.

(Reporting by Doina Chiacu; editing by David Ljunggren and Aurora Ellis)