Photo credit: Ting Shen/Bloomberg

A wave of companies has rushed into the market, eager to deliver AI services to users. Yet, some have fallen short, offering little more than empty promises.

The Federal Trade Commission (FTC) made an announcement that they have taken action against multiple companies that have relied on artificial intelligence to “supercharge deceptive or unfair conduct that harms consumers,” as part of its “Operation AI Comply.”

According to the FTC, there are companies that promoted an AI tool allowing customers to create fake reviews and made a project that sold “AI Lawyer” services. Additionally, FTC has taken actions against multiple companies that claimed AI can help consumers make money through online storefronts.  

Stating the reason behind Operation AI Comply, 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 the report, the FTC has already named some of the companies against which it has taken action: DoNotPay, Ascend Ecom, Ecommerce Empire Builders (EBB), Rytr, and FBA Machine.

For DoNotPay, the company allegedly did not conduct testing to determine whether its AI chatbot’s output was equal to the level of a human lawyer. DoNotPay settled the charges by paying $193,000 and providing notice to consumers who subscribed to the service between 2021 and 2023.

FTC’s investigation found Ascend promised consumers it would create stores producing five-figure monthly for almost all consumers; however, users were left with empty bank accounts and hefty credit card bills. 

EBB also did a similar scheme to Ascend, promising users massive profits without any evidence. As such, the court ordered both EBB and Ascend to temporarily halt the scheme and put it under the control of a receiver.

On the other hand, Rytr used AI to generate false and deceptive written content for consumer reviews, violating the trade laws. To prevent any further damage, a proposed order was made that would prevent Rytr from conducting such illegal activities. 

The final firm targeted by FTC has a much deeper secret compared to other firms. According to the FTC report, Bratislav Rozenfeld initially started a company called Passive Scaling, and had to rebrand it to FBA Machine due to consumers seeking refunds and bring lawsuits. Under the new name, the project still failed to fulfill its promises to users of earning profits. The court issued an order that halted the scheme and put it under the control of a receiver.