The Federal Trade Commission yesterday announced a crackdown on companies making deceptive claims regarding the use of artificial intelligence, including a settlement with DoNotPay, a company that purported to offer consumers “the world’s first robot lawyer” which was once aimed at helping consumers avoid paying tickets and debts. This announcement is part of the FTC’s newly launched Operation AI Comply, aimed at tackling unfair or deceptive practices involving AI tools that harm consumers.
Why it matters: As AI becomes increasingly integrated into various sectors, companies are making bold claims about its capabilities. The FTC’s actions highlight that AI is not exempt from scrutiny under consumer protection laws.
The details: DoNotPay, which initially gained attention for helping users avoid paying parking tickets, expanded its offerings and marketed itself as an AI-powered substitute for a human lawyer, claiming it could generate “ironclad” legal documents and provide services typically requiring a licensed attorney. However, the FTC found that these claims were not substantiated, and the AI chatbot lacked the necessary legal expertise to function as promised.
- DoNotPay agreed to a settlement that includes a $193,000 payment and a commitment to notify consumers who subscribed between 2021 and 2023 about the limitations of its legal services.
The bigger picture: DoNotPay is just one of several companies targeted by the FTC as part of Operation AI Comply. The agency also filed lawsuits against other businesses making exaggerated claims about AI’s ability to generate profits and assist with e-commerce ventures.
Zoom out: DoNotPay was prepping to offer its robot lawyer service to represent an individual in court, but backed away when threatened by state bar associations that it could face accusations of engaging in the unauthorized practice of law. It instead opted to pivot to help people deal with expensive medical bills, unwanted subscriptions, and issues with credit reporting agencies.
What they’re saying: “Using AI tools to trick, mislead, or defraud people is illegal,” said FTC Chair Lina M. Khan. “The FTC’s enforcement actions make clear that there is no AI exemption from the laws on the books.”
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