FTC takes action against companies for deceptive AI claims and schemes
The FTC announced enforcement actions against five companies under 'Operation AI Comply' for making deceptive claims about their AI services, including DoNotPay's false promises about AI legal services and Rytr's review generation feature. DoNotPay settled for $193,000 and agreed to notify customers of its service limitations.
What happened
The FTC announced enforcement actions against five companies on 25 September 2024 under 'Operation AI Comply' for using artificial intelligence in deceptive and unfair ways.
Three cases involved companies claiming to help consumers generate passive income through e-commerce storefronts. DoNotPay settled charges that it falsely claimed its AI chatbot could substitute for a human lawyer, promising consumers could 'sue for assault without a lawyer' and 'generate perfectly valid legal documents in no time.' Rytr settled charges related to a feature that allowed users to generate fake product reviews.
DoNotPay agreed to pay $193,000 and notify customers who subscribed between 2021 and 2023 of the limitations of its legal feature. Rytr agreed to stop providing review generation services. Neither company admitted wrongdoing.
Reported impact
DoNotPay's service was used by only a few hundred of its millions of customers. The FTC alleged that Rytr subscribers used the review generation tool to create thousands of convincing or critical posts with minimal user input.
Index analysis
FTC Chair Lina M. Khan stated: 'Using AI tools to trick, mislead, or defraud people is illegal. The FTC's enforcement actions make clear that there is no AI exemption from the laws on the books.'
Governance controls
The FTC alleged that DoNotPay did not conduct testing to determine whether its AI chatbot's output matched the level of a human lawyer and did not hire or retain any attorneys. Both Republican FTC commissioners criticized the action against Rytr, saying it stretched the FTC's authority.
Classification
Sources and evidence
This record was researched and written by the Index, based on the following original reporting.