FTC Announces Multiple Lawsuits Against AI-Driven Deception
The FTC on Wednesday announced enforcement action against five companies it said engaged in AI-driven deception online. Action against one of the companies resulted in a monetary settlement, and three of the cases are ongoing. Republican Commissioners Andrew Ferguson and…
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Melissa Holyoak voted against filing one of the complaints. The other four complaints were filed through 5-0 votes. DoNotPay agreed to settle for $193,000 over claims against its “robot lawyer” service. The company’s “product failed to live up to its lofty claims that the service could substitute for the expertise of a human lawyer,” the agency said. Republicans voted against filing a claim against Rytr. The agency said the company violated the FTC Act by providing subscribers with tools to “generate false and deceptive written content for consumer reviews.” Rytr agreed to a nonmonetary settlement barring the company from engaging in similar behavior in the future. Holyoak in a dissenting statement noted the complaint doesn’t allege any of the company’s customers actually “posted any draft reviews” online. Ferguson said: “Treating as categorically illegal a generative AI tool merely because of the possibility that someone might use it for fraud is inconsistent with our precedents and common sense. And it threatens to turn honest innovators into lawbreakers.” The agency announced ongoing litigation against three of the companies whose business schemes have been blocked in federal court. The FTC is suing Ascend Ecom, a company the agency said falsely claimed to offer AI tools that deliver customers thousands of dollars a month in passive income on e-commerce platforms like Amazon. The complaint alleges the company cheated consumers out of at least $25 million since 2021. The FTC is suing Ecommerce Empire Builders for similar allegations. The company promised consumers thousands of dollars in monthly income from online storefronts. A separate lawsuit against FBA Machine alleges it cheated consumers out of more than $15.9 million offering services promising guaranteed income from online storefronts.