FTC accuses DoNotPay and 5 other AI companies of exaggerating technology to deceive consumers

Odaily Planet Daily News According to the Federal Trade Commission (FTC) of the United States, businesses are being warned that they will face serious consequences if they attempt to deceive consumers by exaggerating the capabilities of artificial intelligence. FTC announced on Tuesday that it has filed lawsuits against five companies, alleging that these companies used artificial intelligence hype to provide deceptive services to consumers. FTC Chairman Lina Khan said, ‘Using AI tools to deceive, mislead, or defraud people is illegal. FTC’s enforcement actions clearly demonstrate that AI is also subject to legal constraints.’ The companies mentioned by the FTC include DoNotPay (which provides AI robot lawyer services), Ascend Ecom (selling AI tools that claim to help consumers quickly obtain passive income), Ecommerce Empire Builders (claiming to help consumers build an “AI-driven e-commerce empire” for a fee starting at $2000), and Rytr (a free generative AI writing platform, but the FTC calls it a tool for generating fake customer reviews used to “pollute the market”). Another company, FBA Machine (formerly known as Passive Scaling), promises consumers that they can run a ‘seven-figure’ business, based on the claim that customers earn over $100,000 per month. The FTC alleges that this program has caused consumers to lose over $15.9 million due to deceptive income claims. A federal judge has issued a temporary restraining order against Ascend Ecom, Ecommerce Empire Builders, and FBA Machine, placing these companies under the control of a court-appointed receiver. The FTC said further action against DoNotPay and Rytr is pending. It is understood that “AI washing” refers to a marketing technique in which enterprises exaggerate or falsely promote their products or services and the use of artificial intelligence. They try to make the product appear more advanced or innovative than it actually is.