FTC Taking Action Against AI's Unlawful Representations

The Federal Trade Commission (FTC) will not take all AI innovation at face value and this was shown clearly when they took action against DoNotPay. The fair trade agency alleged that the AI-powered company, who called itself as "the world's first robot lawyer", failed to back its claims that it could replace human legal representation.

The agency's complaint surmised that DoNotPay did not conduct tests to assess whether its AI chatbot was equivalent to a human lawyer, and that the company did not hire or retain any attorneys of its own. DoNotPay has agreed to a proposed settlement that would see it face fines of US$ 193,000.

In addition, the settlement will require DoNotPay to inform customers who subscribed to its service between 2021 and 2023 about the limitations of its offerings.

This proposed settlement is part of an FTC program called Operation AI Comply, which is targeting businesses that leverage artificial intelligence to make deceptive claims.

"Using AI tools to trick, mislead, or defraud people is illegal," FTC Chair Lina M. Khan said. "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."

In addition to promising legal services, DoNotPay also claimed it could get accounts unbanned from social media platforms. The company postponed its first attempt to use its AI chatbot in a court setting in 2023 after multiple state bar associations intervened in the case.