‘Robot lawyer’ company faces $193,000 fine under FTC crackdown on artificial intelligence

The agency announced that DoNotPay, a company that claimed to offer “the world’s first robot lawyer,” has agreed to a $193,000 settlement with the Federal Trade Commission on Tuesday. The move is part of Operation AI Comply, a modern FTC enforcement effort aimed at cracking down on companies that employ artificial intelligence services to defraud or defraud customers.

According to FTC ComplaintDoNotPay said it would “replace the $200 billion legal industry with artificial intelligence” and that its “robot lawyers” could replace the expertise and efficiency of a human lawyer in generating legal documents. However, the FTC says the company made this claim without any testing to back it up. In fact, the complaint says:

None of the Service’s technologies have been trained in a comprehensive and up-to-date set of federal and state laws, regulations and court decisions, or in the application of those laws to fact patterns. DoNotPay employees have not tested the quality and accuracy of the legal documents and advice generated by most of the law-related features on the Website. DoNotPay does not employ attorneys or employ attorneys, let alone attorneys with appropriate legal expertise, to test the quality and accuracy of the Service’s legal features.

The complaint also alleges that the company even told consumers that they could employ its artificial intelligence service to file an assault lawsuit without hiring a human, and that it could check petite business websites for violations based on email addresses alone. consumer. DoNotPay claimed it would save companies $125,000 in legal fees, but the FTC says the service was not effective.

The FTC says DoNotPay has agreed to pay $193,000 to settle the charges against it and to warn consumers who subscribed between 2021 and 2023 about the limitations of its offerings related to the law. DoNotPay will also have no right to claim that it can replace any professional service without providing proof.

The FTC also announced action against other companies that used AI services to mislead customers. This includes the AI ​​”writing assistant” service Rytr, an FTC-owned company says provides subscribers with tools to create artificial intelligence-generated phony reviews. The move against Rytro comes just over a month after the Federal Trade Commission’s FTC decision announced a final prohibition rule all companies from creating or selling phony reviews, including those generated by artificial intelligence. It will go into effect soon, which means the FTC can seek a maximum of $51,744 for each infringement against a company.

FTC too filed a lawsuit against Ascend Ecom, which allegedly defrauded consumers of at least $25 million. Ascend promised customers that using AI-powered tools, they would be able to set up online stores on e-commerce platforms like Amazon that would generate five-figure monthly revenues.

“It is illegal to use artificial intelligence tools to deceive, mislead or defraud people,” said FTC Chair Lina M. Khan. “The FTC’s enforcement actions make clear that there is no AI exception to current law. By cracking down on unfair or deceptive practices in these markets, the FTC ensures honest companies and innovators have a fair chance and consumers are protected.”