The Federal Trade Commission (FTC) has initiated a crackdown on deceptive claims and schemes involving artificial intelligence (AI) through its new law enforcement sweep, Operation AI Comply. The FTC is taking action against several companies accused of using AI to engage in deceptive or unfair practices that harm consumers.
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. By cracking down on unfair or deceptive practices in these markets, FTC is ensuring that honest businesses and innovators can get a fair shot and consumers are being protected.”
Among the cases announced are actions against DoNotPay, Ascend Ecom, Ecommerce Empire Builders (EEB), Rytr, and FBA Machine.
**DoNotPay**
DoNotPay claimed to offer an AI service described as “the world’s first robot lawyer,” which promised services such as allowing consumers to sue for assault without a lawyer and generating valid legal documents quickly. However, the FTC alleges that DoNotPay could not deliver on these promises and did not conduct adequate testing to verify its claims. The company has agreed to a proposed settlement requiring it to pay $193,000 and notify consumers about the limitations of its law-related features.
**Ascend Ecom**
The FTC has filed a lawsuit against Ascend Ecom for allegedly falsely claiming that its AI-powered tools could help consumers earn thousands of dollars monthly by opening online storefronts. According to the complaint, this scheme defrauded consumers of at least $25 million. The federal court has temporarily halted the scheme pending further proceedings.
**Ecommerce Empire Builders**
EEB faces charges for falsely claiming it could help consumers build an “AI-powered Ecommerce Empire” through expensive training programs or purchasing online storefronts. The FTC alleges that EEB failed to deliver on its promises of significant income while enriching CEO Peter Prusinowski with consumer funds. A federal court has also temporarily halted this scheme.
**Rytr**
Rytr marketed an AI writing assistant capable of generating consumer reviews based on minimal input. The FTC's complaint alleges that these reviews were often false and misleading, potentially deceiving other consumers making purchasing decisions. A proposed order aims to prevent Rytr from engaging in similar conduct in the future.
**FBA Machine**
In June 2024, the FTC took action against FBA Machine for promising guaranteed income through online storefronts utilizing AI-powered software but failing to deliver on these promises. This scheme reportedly cost consumers more than $15.9 million based on deceptive earnings claims.
Operation AI Comply builds upon recent FTC cases involving false claims about artificial intelligence across various sectors including career training programs and genetic testing services.
The Federal Trade Commission works to promote competition and protect and educate consumers about fraudulent activities through platforms like ReportFraud.ftc.gov.
