If it seems like every product and piece of software today claims to use artificial intelligence in some way, shape, or form, it’s not just you. In fact, the Federal Trade Commission yesterday announced it has launched an enforcement action against a company that claimed to be able to use conversational AI to replace customer service representatives, but instead were making false and unsubstantiated claims and refused to provide refunds.
The FTC has filed a complaint and motion for a temporary restraining order in Arizona federal court against Air AI Technologies, its owners Caleb Matthew Maddix, Ryan Paul O’Donnell, and Thomas Matthew Lancer, and five affiliated Arizona-based LLCs: Apex Holdings Group, Apex Scaling, Apex 4 Kids, New Life Capital, and Onyx Capital. The agency alleges these defendants have bilked consumers out of approximately $19 million since February 2023 by deceptively marketing AI-driven business tools and coaching services.
At the heart of the case is Air AI’s “conversational AI” product, touted as a game-changer for small businesses. Defendants sold bundles of coaching, support, and AI software, promising users could earn back tens of thousands in days or even millions annually. They also hawked high-priced licenses — up to $100,000 — allowing buyers to resell the tech, framing it as a low-risk opportunity to get in on the AI boom. To seal deals, they offered ironclad refund guarantees: full money back if earnings targets (often double or triple the investment) weren’t met within months, or if unsatisfied for any reason.
But according to the FTC, the reality was far different. Consumers received glitchy, underperforming software that couldn’t replace human reps as advertised. Many couldn’t launch profitable businesses or recoup costs, and licensees struggled to resell the faulty products. When refunds were requested, defendants stalled, obfuscated, and ghosted buyers, leaving small business owners, including some who took on third-party loans, in debt up to $250,000.
The complaint alleges violations of the FTC Act for deceptive practices, the Telemarketing Sales Rule (TSR) for misrepresenting services and risks via phone sales, and the Business Opportunity Rule for failing to provide required disclosures, making unsubstantiated earnings claims, and ignoring refund policies.
The FTC is seeks=ing a TRO to halt operations, plus permanent injunctions, consumer redress, and civil penalties.
Read the complaint. Read the TRO motion
