Lawrence Damilola
The U.S. Federal Trade Commission (FTC) announced actions against five companies accused of using artificial intelligence in allegedly deceptive ways. These cases are part of the FTC’s effort to address the misuse of AI in consumer-related services.
Yesterday, the Federal Trade Commission announced the initiation of “Operation AI Comply,” a series of law enforcement actions aimed at targeting five corporations. These companies have been utilizing artificial intelligence to enhance practices that deceive or disadvantage consumers.
Three companies promoted schemes that claimed to help consumers generate passive income through AI-powered e-commerce storefronts. The FTC stated that these companies misled consumers and suspended their operations.
FTC announces crackdown on deceptive AI claims and schemes: https://t.co/NVPbM8QY9F /1
— FTC (@FTC) September 25, 2024
DoNotPay Settles Over AI Legal Services Claims
The FTC reached a settlement with DoNotPay, which advertised itself as offering AI-driven legal services. The company claimed to provide automated legal documents and assist consumers with various legal issues.
However, the regulator found that DoNotPay’s services did not fulfill these promises. As part of the settlement, DoNotPay agreed to pay $193,000 and notify customers about the limitations of its AI legal services. The company explained that the disputed service had been discontinued and was used by a small portion of its customer base.
Another company, Rytr, was targeted by the FTC for allegedly providing a tool that allowed users to create fake product reviews. The FTC stated that Rytr’s AI-powered writing tool enabled users to generate convincing but misleading reviews with minimal input. Rytr agreed to stop offering this review generation feature. Although Rytr did not admit to any wrongdoing, the company settled with the FTC to resolve the matter.
Ascend Ecom and Ecommerce Empire Builders (EEB) were also part of the FTC’s actions. The agency accused these companies of operating fraudulent e-commerce business models. Ascend Ecom was charged with defrauding consumers of over $25 million by claiming that AI could help generate significant passive income through online stores. EEB was also charged with making false promises of high earnings through its AI-powered e-commerce services.
The FTC filed a lawsuit against FBA Machine, another company promoting AI-powered online store services. The agency claims that the company promised guaranteed income but failed to deliver, allegedly causing consumer losses of over $15.9 million.
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Lawrence does not hold any crypto asset. This article is provided for informational purposes only and should not be construed as financial advice. The Shib Magazine and The Shib Daily are the official media and publications of the Shiba Inu cryptocurrency project. Readers are encouraged to conduct their own research and consult with a qualified financial adviser before making any investment decisions.
