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The U.S. Federal Trade Commission (FTC) has initiated a crackdown on companies accused of misleading consumers with deceptive claims about artificial intelligence (AI), including a firm promoting an “AI lawyer.”
On September 25, the FTC announced the launch of “Operation AI Comply,” a new enforcement initiative aimed at addressing the misuse of AI in consumer markets. The operation focuses on five companies that allegedly exploited AI to engage in deceptive or unfair practices.
FTC Chair Lina Khan emphasized the illegality of using AI to deceive or defraud consumers, stating, “There is no AI exemption from the laws on the books.” She also highlighted that the FTC’s actions are intended to protect consumers and level the playing field for legitimate businesses and innovators.
Among the companies targeted is DoNotPay, which claimed to offer the “world’s first robot lawyer.” According to the FTC, the company falsely promised to provide legal services, such as generating valid legal documents and filing lawsuits for assault, but failed to deliver on these claims. The agency also accused DoNotPay of not adequately testing its AI bot against the performance of real lawyers and failing to hire or retain qualified legal counsel.
DoNotPay has settled the case by agreeing to pay $193,000 in fines and notifying consumers about the limitations of its services.
Another company under scrutiny is Ascend Ecom, which allegedly operated a fraudulent online business scheme, promising consumers substantial passive income through AI-driven solutions. The FTC’s lawsuit claims the company defrauded consumers of more than $25 million.
Ecommerce Empire Builders was also charged for making false promises about the profitability of AI-powered e-commerce businesses, which led to numerous consumer complaints when the promised high earnings failed to materialize.
Additionally, the FTC targeted Rytr, an AI writing assistant platform accused of generating misleading consumer reviews. The FTC’s proposed settlement seeks to prohibit the company from offering such services in the future.
Lastly, the FBA Machine, which promoted guaranteed income through AI-powered online stores, was sued by the FTC in June. The scheme allegedly defrauded consumers of over $15.9 million, with the case still ongoing.
This enforcement action underscores the FTC’s commitment to addressing the misuse of AI technologies and protecting consumers from deceptive business practices in the rapidly evolving digital landscape.
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