Federal Trade Commission Chair Lina Khan said, “Using AI tools to trick, mislead, or defraud people is illegal.”
The Federal Trade Commission announced a crackdown on what the regulator called"deceptive AI claims and schemes" by three business opportunity ventures and two companies, including the legal services firm DoNotPay.
"The proposed order also will prohibit the company from making claims about its ability to substitute for any professional service without evidence to back it up," the FTC said. "Since about 2023, Defendants' deceptive sales pitch has said their business model is powered by artificial intelligence ," the suit says."Defendants claim consumers will quickly earn thousands of dollars in passive income, which will be generated from sales in online stores on e- commerce platforms such as Amazon.com and Walmart.com."
In a second lawsuit, filed under seal in June in New Jersey federal court, the FTC targeted an opportunity scheme that operated under the names Passive Scaling and FBA Machine, which allegedly cost customers around $16 million or more based on deceptive claims of guaranteed income through online storefronts that purportedly used AI-powered software.
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