FTC Takes Enforcement Actions Against DoNotPay and Rightle
As businesses diversify their use of generative AI, from AI chatbot legal services to ghostwriting customer reviews, U.S. regulators have begun cracking down. They determined that the products and exaggerated advertising of these companies undermine fair market competition.
On the 25th (local time), the U.S. Federal Trade Commission (FTC) announced enforcement actions against five companies and venture startups providing services utilizing generative AI. These companies are accused of misleading consumers by promoting AI technology in deceptive and unfair ways.
One of the companies hit by the FTC's crackdown is DoNotPay, an online legal service provider that markets itself as the "world's first robot lawyer." DoNotPay has promoted that using its AI service allows customers to sue someone for assault or instantly generate valid legal documents without hiring a lawyer. However, the FTC pointed out that DoNotPay did not test whether the outputs of their AI chatbot truly match the level of a human lawyer.
The FTC stated, "Advertising that your AI service can replace professionals without evidence will also be prohibited going forward," and fined DoNotPay $193,000. Earlier, in February, DoNotPay planned to attempt the world's first AI legal defense in a California court but withdrew under pressure from the state bar association.
Rytr, an AI tool that writes blogs or customer reviews on behalf of users, also did not escape the FTC's scrutiny. The FTC noted that Rytr's AI service "generated specific and detailed reviews from users' limited inputs" and "contained a large amount of false information that could deceive and mislead potential consumers reviewing the feedback to make purchasing decisions." Rytr will cease its review ghostwriting service under an agreement with the FTC.
FTC Chair Lina Khan emphasized in a statement, "Using AI tools to deceive or mislead people is illegal," adding, "The FTC will crack down on unfair practices in the AI market to ensure honest companies and innovators have a fair chance and consumers are protected."
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