### FTC Cracks Down on AI Misrepresentation, Fines DoNotPay $193,000

The Federal Trade Commission (FTC) has announced a significant enforcement action against DoNotPay, a firm that claimed to offer the "world's first robot lawyer." The company has agreed to a $193,000 settlement with the FTC. This enforcement is part of Operation AI Comply, an initiative to curb companies that mislead or defraud customers using artificial intelligence technologies.

According to the FTC complaint, DoNotPay had asserted that it aimed to revolutionize the $200-billion-dollar legal industry with AI. The company claimed their AI-powered "robot lawyers" could generate legal documents and provide legal advice comparable to that of a human lawyer. However, the FTC accused DoNotPay of making these claims without substantiating them through adequate testing.

The complaint outlined several issues: DoNotPay's AI technologies were not trained on a comprehensive database of current federal and state laws, regulations, and judicial decisions. Additionally, the quality and accuracy of the generated legal documents and advice were not rigorously tested by DoNotPay employees. Furthermore, the company had neither hired nor consulted lawyers to ensure the efficacy of their service.

Among the more startling claims, DoNotPay suggested that its AI services could enable consumers to sue for assault without the need for a human lawyer and could even check small business websites for legal violations based on an email address alone. The FTC highlighted that these promises were not delivered effectively and that businesses reportedly could save $125,000 in legal fees by using DoNotPay services, a claim the FTC found to be baseless.

In the settlement, DoNotPay has agreed to warn customers who subscribed between 2021 and 2023 about the limitations of its legal services. Additionally, the company is barred from making unsupported claims that its AI can replace professional services.

The FTC also took action against other firms misusing AI. For instance, Rytr, an AI writing assistant service, was accused of enabling the creation of fake reviews, a practice now banned by an FTC rule. Companies violating this rule could face penalties up to $51,744 per infraction. Furthermore, the FTC sued Ascend Ecom for allegedly defrauding consumers of at least $25 million by promising lucrative online stores powered by AI tools.

FTC Chair Lina M. Khan emphasized that utilizing AI to deceive or cheat customers is unlawful. She remarked, "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."