‘Robot lawyer’ company faces $193,000 fine as part of FTC’s AI crackdown

DoNotPay, a institution that claimed to connection the “world’s archetypal robot lawyer,” has agreed to a $193,000 colony with the Federal Trade Commission, the bureau announced on Tuesday. The determination is simply a portion of Operation AI Comply, a caller instrumentality enforcement effort from the FTC to ace down connected companies that usage AI services to deceive oregon defraud customers.

According to the FTC complaint, DoNotPay said it would “replace the $200-billion-dollar ineligible manufacture with artificial intelligence” and that its “robot lawyers” could substitute for the expertise and output of a quality lawyer successful generating ineligible documents. However, the FTC says the institution made the assertion without immoderate investigating to backmost it up. In fact, the ailment says,

The ailment besides alleges the institution adjacent told consumers they could usage the company’s AI work to writer for battle without hiring a human, and that it could cheque tiny concern websites for ineligible violations based connected a consumer’s email code alone. DoNotPay claimed this would prevention businesses $125,000 successful ineligible fees, but the FTC says the work was not effective.

The FTC says that DoNotPay has hold to wage $193,000 to settee the charges against it and to pass consumers who subscribed betwixt 2021 and 2023 astir the limitations of its law-related offerings. DoNotPay volition besides not beryllium allowed to assertion it tin regenerate immoderate nonrecreational work without providing evidence.

The FTC besides announced enactment against different companies that person utilized AI services to mislead customers. That includes AI “writing assistant” work Rytr, a institution the FTC says provides subscribers with tools to make AI-generated fake reviews. The determination against Rytr comes a small implicit a period aft the FTC Federal Trade Commission announced a last regularisation banning all companies from creating oregon selling fake reviews, including AI-generated ones. It volition soon spell into effect, which means the FTC tin can question a maximum of up to $51,744 per usurpation against companies.

The FTC besides filed a lawsuit against Ascend Ecom, which allegedly defrauded consumers of astatine slightest $25 million. Ascend promised customers that by utilizing its AI-powered tools, they could commencement online stores connected ecommerce platforms similar Amazon that’d nutrient a five-figure monthly income.

“Using AI tools to trick, mislead, oregon defraud radical is illegal,” said FTC Chair Lina M. Khan. “The FTC’s enforcement actions marque wide that determination is nary AI exemption from the laws connected the books. By cracking down connected unfair oregon deceptive practices successful these markets, FTC is ensuring that honorable businesses and innovators tin get a just changeable and consumers are being protected.”