FTC Targets AI Firms for Misleading Claims: DoNotPay, Rytr Among First

Sep 28, 2024

On September 25, the FTC announced legal action against companies promoting false or subpar AI technologies. The first five companies facing lawsuits are DoNotPay, Ascend Ecom, Ecommerce Empire Builders, Rytr, and FBA Machine.

DoNotPay, which offers robot lawyer services, was launched in 2016 by Stanford student Joshua Browder. The service claims to replace human lawyers and charges a subscription fee of $36 per quarter. However, the FTC argues that DoNotPay cannot prove its AI lawyer is equivalent to a human lawyer and that some features, like detecting hundreds of federal violations with one click, are blatantly false.

Rytr provides AI-generated reviews, which the FTC found to be of poor quality and filled with false information. These reviews pollute the market and serve as tools for businesses to boost their ratings dishonestly.

Disclosures

I/We may personally own shares in some of the companies mentioned above. However, those positions are not material to either the company or to my/our portfolios.

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