FTC Cracks Down on Deceptive AI Claims

The Federal Trade Commission (FTC) has recently launched Operation AI Comply, a sweeping initiative aimed at cracking down on deceptive AI claims and schemes. The FTC has taken action against several companies, including DoNotPay, for making false promises about their AI-powered services. This article explores the key deceptive claims, the impact on consumers, and the regulatory measures proposed to prevent similar incidents in the future.

DoNotPay, a U.K.-based company, claimed to offer an AI lawyer service that could replace human lawyers and generate legal documents in no time. However, the FTC alleges that DoNotPay's service failed to live up to its lofty claims. The company did not conduct testing to ensure its AI chatbot's output was equal to the level of a human lawyer and did not hire or retain any attorneys. Moreover, DoNotPay's service for checking small business websites for legal violations was also ineffective.


Ascend Ecom, another company targeted by the FTC, claimed to use AI-powered tools to help consumers quickly earn thousands of dollars in passive income by opening online storefronts. The FTC alleges that Ascend Ecom defrauded consumers of at least $25 million by making deceptive earnings claims. The company charged consumers tens of thousands of dollars to start online stores on platforms such as Amazon and Walmart, while requiring them to spend tens of thousands more on inventory. Despite promising consumers five-figure monthly income by the second year, the complaint notes that the promised gains never materialized, leaving consumers with depleted bank accounts and hefty credit card bills.


Rytr, a Delaware-based company, sold an AI-enabled writing assistant with a tool specifically designed for generating online reviews and testimonials. The FTC complaint alleges that Rytr customers could generate an unlimited number of reviews with specific details that would almost certainly not be true for those users. This enabled the creation of false reviews that would have tricked people reading those reviews online, potentially harming many consumers.

To prevent similar deceptive AI practices in the future, the FTC has proposed several regulatory measures. These include requiring companies to have evidence to back up their claims about AI-powered services, prohibiting them from making false promises about the capabilities of their AI tools, and ensuring that AI-generated content is clearly labeled as such.

In conclusion, the FTC's Operation AI Comply serves as a reminder to investors and consumers alike to be wary of deceptive AI claims and schemes. By cracking down on unfair or deceptive practices, the FTC is ensuring that honest businesses and innovators can get a fair shot, and consumers are being protected. As AI continues to evolve, it is crucial for companies to adhere to ethical and legal standards when promoting their AI-powered services.