The U.S. Federal Trade Commission (FTC) has launched a crackdown on companies accused of misleading consumers with false claims related to artificial intelligence (AI). Under the initiative dubbed “Operation AI Comply,” the FTC filed complaints against several firms, including one that marketed itself as an “AI lawyer” and another that promised consumers lucrative returns through AI-driven online storefronts. FTC Chair Lina Khan emphasized that utilizing AI tools to deceive or defraud individuals is illegal and reiterated that existing laws apply to AI, leaving no room for an “AI exemption.”
Among the companies targeted, DoNotPay has come under scrutiny for asserting that it could potentially replace the $200 billion legal industry by allowing users to generate valid legal documents and pursue lawsuits without professional legal assistance. The complaint against DoNotPay highlighted that the firm lacked human lawyers on retainer to ensure the validity of the legal counsel provided by its AI chatbots. The company has proposed a settlement of $193,000, which includes notifying consumers about the limitations of its services.
Another significant target of the FTC’s actions is Ascend Ecom, accused of running a $25 million scam by promoting AI tools that purportedly helped users generate passive income through online storefronts. The company allegedly misled consumers with claims of industry leadership in AI and promised substantial earnings. Following the FTC’s intervention, a federal court temporarily halted Ascend’s operations, underscoring the seriousness of the allegations.
The FTC’s efforts extend to other businesses as well, including Rytr, which marketed an AI writing assistant that enabled subscribers to create deceptive consumer reviews. The agency contends that Rytr facilitated the generation of misleading content, violating federal consumer protection laws. This series of actions underscores the growing concern about the potential misuse of AI technologies and the need for stringent regulations to protect consumers from fraudulent practices in the digital marketplace.
