AI scams, including ‘robot lawyer’, target of new FTC crackdown

The Federal Trade Commission announced a new law enforcement effort on Tuesday called Operation AI Comply, and as part of the sweep, it has taken action against multiple companies that use AI Comply. artificial intelligence to “supercharge” deceptive products and services.

The cases included fake reviews generated by artificial intelligence, the “world’s first robot lawyer” and online store scams.

The The FTC said in a statement: It is stated that consumers are losing tens of millions of dollars on the promise that AI-powered problem-solving and automation will save them time and money, and in e-commerce cases, increase their earnings.

After all, the companies did not live up to their claims and knew they were deceiving customers.

“It is illegal to use AI tools to deceive, mislead or defraud people.” in question “The FTC’s enforcement actions make it clear that AI has no exemptions under the law on the books,” said Lina M. Khan, the agency’s chairwoman.

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The FTC’s complaint against Rytr, a company that offers an AI writing service, explains how subscribers can effectively create fake reviews that have no basis in input from their users. The FTC said that in many cases, the AI-generated reviews contained false information that deceived consumers interested in purchasing a particular product. Some of Rytr’s subscribers created thousands of reviews that potentially contained false information.

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The FTC alleged that Rytr offers a service capable of “spreading a flood of fake reviews that would harm both consumers and honest competitors.” The FTC proposed to prohibit Rytr from advertising, promoting, marketing, or selling a service related to generating consumer reviews or testimonials in the future. The agency banned AI-generated and fake reviews In August.

As part of Operation AI Comply, the FTC took action against a company called DoNotPay, which told consumers its AI robot could help them “file assault lawsuits without a lawyer” and “produce fully valid legal documents in a short amount of time.” The company billed the service as the “world’s first robot lawyer,” but it did not conduct tests to compare its AI chatbot to a human lawyer. It also did not have lawyers on staff.

The company instead told customers that small businesses could check their websites for violations of federal and state laws, but that feature didn’t take effect.

The FTC also filed complaints against three companies that preyed on people looking to open online stores, including TikTok, Walmart, Amazon and Etsy. These businesses typically charged significant fees to set up an online store powered by proprietary software and artificial intelligence that could boost their profits. Some customers were required to buy unsold inventory.

One company, FBA Machine, promised its customers that they could run a “7-figure business” that would be “risk-free.” It falsely guaranteed refunds to customers who were unable to recover their initial investments, which the FTC said ranged from tens of thousands to hundreds of thousands of dollars. In total, customers lost approximately $16 million in the scheme.

Another company, Ascend Ecom, told customers that it could eventually open stores that would generate five-figure monthly revenues thanks to its “cutting-edge” AI tools. The FTC estimated that the scheme defrauded customers of at least $25 million.

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