The FTC Cracks Down on Companies Selling Deceptive AI Tools

The Federal Trade Commission is taking a tough stance against companies that sell AI tools that are deemed harmful to consumers. However, there are concerns among experts and even some FTC commissioners that the agency's actions could have unintended consequences.

FTC Targets Companies Using AI for Deceptive Practices

Last week, the FTC announced that it had singled out five companies utilizing artificial intelligence to facilitate deceptive or unfair practices that negatively impact consumers. Among the targeted companies, one claimed to offer AI "lawyer" services, while others falsely promoted AI tools for creating online stores. Notably, Rytr, a company that has been providing an AI writing assistant since 2021, was mentioned in the FTC's crackdown. The agency highlighted a feature in Rytr's tool that generates fake testimonials and reviews.

FTC's Concerns about Rytr's AI Writing Assistant

According to court documents, Rytr's service has the capability to swiftly produce a vast number of "authentic-sounding reviews" with minimal user input. The FTC's complaint alleges that the primary purpose of this tool is to publish misleading reviews that deceive consumers and saturate the market with fake feedback.

FTC's Efforts to Combat Fake Reviews

In August, the FTC announced plans to impose stricter penalties on companies that resort to fake reviews to enhance product visibility or website traffic. The agency aims to reinforce regulations surrounding such practices, emphasizing that consumers rely on reviews for accurate information about products and services.

Concerns Over FTC's Crackdown

Despite the prevalence of fake reviews and their negative impact, not everyone supports the FTC's aggressive approach. Neil Chilson, a tech policy expert at Abundance Institute and a former FTC official, criticized the agency's actions against Rytr as overly assertive. He expressed concerns about the potential chilling effect on innovation and competition, particularly in rapidly evolving sectors like artificial intelligence.

During the commission vote, which resulted in a 3-2 split along party lines, two Republican members dissented. Republican commissioner Melissa Holyoak emphasized in her dissent that misguided enforcement actions could impede progress and competition in various industries, especially those at the forefront of AI development.

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By: kniemeyer@insider.com (Kenneth Niemeyer)
Title: The FTC Cracks Down on Companies Selling Deceptive AI Tools
Sourced From: www.businessinsider.com/deceptive-ai-products-fake-online-reviews-crackdown-stifle-innovation-2024-9
Published Date: Sun, 29 Sep 2024 21:12:11 +0000