Talk of “artificial intelligence” or “AI” seems to have hit a fever pitch since ChatGPT launched its prototype in late November 2022. On February 27, the Federal Trade Commission (FTC) warned businesses in a blog post to watch out for making overly broad AI claims about their products and services. The FTC described AI as an ambiguous marketing term that often refers to “a variety of technological tools and techniques that use computation to perform tasks such as predictions, decisions, or recommendations.” The FTC’s focus on AI is not new and it has been warning business of risks of using AI for some time and now is reminding businesses to ensure they are not overhyping their product or service capabilities and that such claims could violate the FTC Act as well as state laws against unfair or deceptive acts and practices, in addition to other laws. Some key ways that businesses’ AI claims or use of AI in products or services could cause issues include:
- Selling or using false or racially biased algorithms
- Exaggerating performance capabilities of AI technology without having adequate substation for claims or clearly qualifying the claim, including claims about the existence of AI in products or services and inaccurate comparisons of products or services with AI technology to those without AI technology
- Violating the Fair Credit Reporting Act, which could apply if AI is used to deny people employment, housing, credit, insurance or other benefits
- Violating the Equal Credit Opportunity Act, which could apply if AI is used that makes credit decisions based on race
In addition, businesses should not lose sight of other ways that use of AI can get them into trouble including, potential violations of privacy and intellectual property laws.