DoNotPay To Pay $193k Fine For Untested AI Lawyer As FTC Cracks Down On Deceptive AI Companies

There’s no question that recent advances made in artificial intelligence (AI) and generative artificial intelligence (GenAI) have enhanced industries globally.

However, the technology has also been used for nefarious purposes such as deceiving people, enforcing fraudulent transactions, coercing innocent and susceptible customers and false promises of delivering services. Add to this generative AI’s viral hallucinatory capabilities that try to pass off false content as genuine information.

This is what the US Federal Trade Commission (FTC) is looking to put a stop to with its latest initiative.

What Is The FTC’s New Crusade About?

The FTC is looking to crack down on AI companies that use the current AI hype to sell their products and services. This also extends to companies that are using AI technology deceptively or unfairly.
Codenamed Operation AI Comply, the FTC’s new law enforcement crusade includes taking action against multiple companies that have leveraged AI to “supercharge” deceptive or unfair conduct that harms consumers.
Among a range of companies in the FTC’s first list of deceptive AI companies sits DoNotPay, a 2015-released application that began as a tool to help people contest parking tickets.
However, the social-cause oriented company dubbed “The Robin Hood of the Internet” began expanding its portfolio of services to areas where the company itself did not possess any valid expertise.

What Did DoNotPay Do?

It’s more like what did DoNotPay not do - test its AI lawyer.
DoNotPay launched an AI-powered application that acted as “the world's first robot lawyer” that provided people with the ability to “sue anyone with the click of a button.”
As per the FTC, this was a bogus claim as the company had not carried out any tests to ascertain if the tool could perform at the same level as a human lawyer.
Furthermore, the company did not have any consulting lawyers to verify or validate the tool’s outputs. This was confirmed by DoNotPay’s CEO Joshua Browder in 2018 when he said its legal services were provided with “no lawyer oversight.”
“None of the Service’s technologies has been trained on a comprehensive and current corpus of federal and state laws, regulations, and judicial decisions or on the application of those laws to fact patterns,” said the FTC complaint.
Ahead of this, DoNotPay ran deceptive ads that quoted the Los Angeles Times saying, “what this robot lawyer can do is astonishingly similar—if not more—to what human lawyers do.”
An investigation by the FTC found that the quote actually belonged to “a high-schooler’s opinion piece in the Los Angeles Times’ High School Insider website, a user-generated content platform for young people.”

TechDogs-"An Screenshot Of DoNotPay's Website Home Page"

Source

What Did DoNotPay Say?

The company accepted no liability in the situation but to settle FTC Act violations, DoNotPay agreed to pay $193,000 and warn subscribers of the service between 2021 and 2023 about its law-related limitations.
The fine payment would come about if the FTC provided a confirmed consent agreement following a 30-day public comment period.
A DoNotPay spokesperson said the company “is pleased to have worked constructively with the FTC to settle this case and fully resolve these issues, without admitting liability.”
“The complaint relates to the usage of a few hundred customers some years ago (out of millions of people), with services that have long been discontinued.”

What Did The FTC Say?

FTC Chair Lina M. Khan, said, “Using AI tools to trick, mislead, or defraud people is illegal. The FTC’s enforcement actions make clear that there is no AI exemption from the laws on the books.”
[Contd.] “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.”

Which Other Companies Did The FTC Pull Up?

The FTC also filed a lawsuit against Ascend Ecom, a platform that’s duped consumers of at least $25 million through false claims of enabling consumers to earn thousands of dollars a month by opening online storefronts by using AI-powered tools.
Ecommerce Empire Builders has been named in a similarly deceptive scheme that entices customers to earn millions of dollars, with false ads showing its clients can make $10,000 monthly.
Rytr marketed itself as an AI writing assistant service specializing in testimonial and review generation enabling users to create an unlimited number of detailed consumer reviews using generic inputs.
FBA Machine also claimed to possess AI-powered software capable of generating guaranteed income through online storefronts, which ended up costing customers over $15.9 million.

Do you think the FTC is correct in its approach to tackling deceptive AI companies? Do you think all AI products need to carry sufficient disclaimers warning its users of potentially incorrect information?

Let us know in the comments below!

First published on Mon, Sep 30, 2024

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Artificial Intelligence (AI)Emerging Technology Artificial Intelligence AI Generative Artificial Intelligence Generative AI GenAI DoNotPay FTC Federal Trade Commission Operation AI Comply Deceptive AI Chatbot

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