Login | November 01, 2024
FTC busts more online AI scammers
RICHARD WEINER
Technology for Lawyers
Published: November 1, 2024
The Federal Trade Commission recently announced a successful enforcement program called Operation AI Comply against multiple companies that the Commission alleges have “relied on artificial intelligence as a way to supercharge deceptive or unfair conduct that harms consumers.”
Caught (!) are several recognizable companies and some that are not so known.
According to FTC Chair Lina M. Khan, “Using AI tools to trick, mislead, or defraud people is illegal... [and] there is no AI exemption from the laws on the books.”
But these people did it anyway.
DoNotPay is front-and-center again. Inking an almost $200,000 settlement with the agency, in which it has to send notices to customers who subscribed to “the world’s first robot lawyer” between 2021-23 warning them about its limitations. Like, it’s not a lawyer, I guess. Also the service has to have disclaimers going forward.
Ascend Ecom is a company that the FTC claims says it has “cutting edge” AI tools to help customers create online stores on Amazon and elsewhere that will create passive income. If that sounds as bogus to you as it does to me, know that the FTC has filed a lawsuit against them. These guys charge thousands of dollars to “help” innocents set up stores that never seem to actually materialize, allegedly. The company is now in a forced receivership.
Ecommerce Empire Builders is another supposed AI-powered storefront creator. The scheme’s owner is being accused of, well, just taking money from people and using it for his own benefit. These people never think they’re going to get caught, do they? Also enjoined and under a receivership.
Rytr (“writer”?) has been selling AI-assisted writing services since 2021. Hard to believe that three year’s ago seems like a century in AI development time, but there it is. Rytr actually worked. It just created false reviews, specifically “detailed reviews that contained specific, often material details that had no relation to the user’s input, and these reviews almost certainly would be false for the users who copied them and published them online. In many cases, subscribers’ AI-generated reviews featured information that would deceive potential consumers who were using the reviews to make purchasing decisions.” Creating fake reviews by any means violates the FTC Act, but super-powering fake reviews is a real no-no. Proposed consent order.
FBA Machine is another fake storefront generator supposedly powered by AI that has been around since 2021 under various aliases, costing customers around $16 million. Also halted and in a receivership.
Those are just a few cases the FTC had against fake, AI-generated schemes.
So, you know what I think of AI, and here’s more of it.