The U.S. Federal Trade Commission (FTC) took action on Wednesday against five companies for using artificial intelligence in deceptive and unfair ways.
Three of these cases targeted businesses that claimed to help consumers generate passive income through e-commerce storefronts. The FTC also settled cases with two companies, DoNotPay and Rytr. DoNotPay falsely claimed to offer automated legal services, while Rytr provided a feature that allowed users to generate fake product reviews.
FTC Chair Lina M. Khan emphasized the illegality of using AI to mislead or defraud people, stating, “The FTC’s enforcement actions make clear that there is no AI exemption from the laws on the books.”
DoNotPay agreed to pay $193,000 and notify its customers, who subscribed between 2021 and 2023, about the limitations of its legal services.
Rytr agreed to stop offering review generation services, which some users had exploited to create thousands of fake reviews with minimal input.
Although neither DoNotPay nor Rytr admitted wrongdoing, both settled with the FTC. Their attorneys did not immediately respond to requests for comment.
These cases revealed internal debate within the FTC. While all five commissioners agreed on taking action against false AI claims, the two Republican commissioners opposed the decision to act against Rytr.
