Diving brief:
- US Artificial Intelligence Startup Air AI Technologies and its operators have used misleading affirmations on business growth, profits potential and reimbursement guarantees to fleece customers, the The Federal Trade Commission presumed in a trial on Monday.
- Since at least in February 2023, the defendants have marketed and sold a series of products and services intended for entrepreneurs and small businesses, by collecting “fake significant incomes” and a guaranteed reimbursement policy, to make clients in collectively shielding of approximately $ 19 million in just a few years, according to the complaint, which was filed in the American district court for the Arizona district. The agency requests a monetary compensation as well as a permanent injunction prohibiting presumed conduct.
- “Companies that market AI -related tools with false promises of unrealistic investment yields and guaranteed reimbursements harm owners of small workers and undergo the legitimate adoption of the AI,” said the director of the FTC consumer protection office, the director of consumer protection, Christopher Mufarrige. “The FTC focuses on the guarantee that the promise of new technologies is not used as a means of misleading consumers.”
Diving insight:
The action comes as the policy of the American AI is in a state of flow. Last month, the White House published an AI action plan which was strongly focused on deregulation while leaving the door open to federal agencies such as the FTC to continue to look closely.
“”[W]He must prevent our advanced technologies from being poorly used or stolen by malicious actors and monitoring the emerging and unforeseen risks of AI, “said the plan. “This will require constant vigilance.”
The plan indicates a “change towards the softening of regulatory obstacles to support the innovation of the AI”, according to a Analysis of PricewaterhouseCoopers.. “But deregulation does not mean a lack of monitoring – this reflects an evolution towards rationalized regulations.”
The “simple cases” involving deceptive marketing allegations are probably outside the scope of the planMichael Atleson, lawyer for the world law firm Dla Piper, wrote in an article published by Law360 earlier this month.
The Commission applies a number of consumer protection and competition laws, including the FTC law, which prohibits deceptive and unfair commercial practices.
In its prosecution filed on Monday, the FTC alleged that the defendants engaged in various illegal activities, in particular by making false complaints or not founded that people who buy their services will be or are likely to make substantial income; omitted to provide consumers with required disclosure documents and declarations of profits; And omit to provide reimbursements when consumers met the requirements of the reimbursement policy.
Air AI is a company in Delaware with its main workplace in Phoenix, Arizona, according to the complaint. Besides Air AI and its operators, the defendants include five other companies accused of having participated in the alleged program.
Defenders sell commercial coaching equipment and support, as well as a series of AI companies related to companies called an AI air access card “, according to the trial. They have marketed their flagship product as” conversational AI “, capable of replacing representatives of human customer service and, in combination with their coaching and other services, which makes business owners Silver, according to the FTC.
According to the complaint, AI AI and its owners argued that its Customers “would win tens of thousands of dollars within 30 days”, while Some may earn millions of dollars using these services.
However, consumers often do not make the profits promised or did not even recover the money paid for Air IA, said the FTC. The agency also said that Air IA and its owners have deceived consumers by promising that Air IA would provide full refund to customers who do not earn a certain amount – generally two or three times their investment in a specified number of months – or are not satisfied with the products for another reason.
In reality, when consumers ask for a reimbursement, defendants rarely honor their guarantee, often delaying and leaving consumers in the dark before completely cutting communication, said FTC.
“Despite the promises of the defendants, at best, the defendants offer coaching who does not help consumers to start or develop a company and Glitchy software which does not work as announced and the licenses to resell them,” according to the complaint. “At worst, defendants sell consumers an undesirable suite of services that do not exist or that are not always available.”
An AI spokesperson could not be attached immediately to comment.
