What happened
The FTC has launched Operation AI Comply, a sweeping initiative to target companies using deceptive AI claims to mislead consumers.
As part of this effort, the FTC has announced five major enforcement actions targeting businesses that have taken advantage of AI hype to sell misleading services and scams.
Among the companies facing legal action is “DoNotPay” which claimedto offer “the world’s first AI Lawyer, while the other “Ascend Ecom” defrauded consumers of $25 million by promising passive income through AI-powered online stores that never delivered.
The FTC also took action against “Ecommerce Empire Builders”, which made unrealistic promises of AI-driven business success, “Rytr”, an AI tool that generated fake reviews, and “FBA Machine”, which misled customers with claims of guaranteed income through AI-run storefronts, costing them over $15.9 million.
With this the FTC is sending a strong message: companies using AI to deceive consumers will face serious consequences.
Why it matters
This crackdown sends a strong message that misleading AI claims won’t be tolerated, and with AI scams on the rise, it will be interesting to see how many more companies face enforcement by the end of 2024.