DoNotPay was fined $193,000 by the U.S. Federal Trade Commission (FTC) for exaggerating its "robo-lawyer" services. The FTC believes that DoNotPay misled consumers by claiming that its AI service could replace human lawyers without sufficient testing. The penalty is part of the FTC’s “AI Compliance Action,” which aims to combat the use of artificial intelligence to deceive consumers. The editor of Downcodes will interpret this incident in detail and analyze its impact on the AI industry.
Recently, “robo-lawyer” company DoNotPay reached an agreement with the U.S. Federal Trade Commission (FTC), agreeing to pay a $193,000 fine. This action is part of the FTC’s “AI Compliance Action” targeting companies that use artificial intelligence services to deceive consumers.
Picture source note: The picture is generated by AI, and the picture is authorized by the service provider Midjourney
The FTC pointed out in the statement that DoNotPay claims to replace the $200 billion legal industry with artificial intelligence, and even claims that its "robot lawyers" can generate legal documents and can completely replace the professional knowledge of human lawyers. However, the FTC said DoNotPay made these claims without any testing to back them up.
The complaint states that DoNotPay’s service technology has not been fully and up-to-date with federal and state laws, regulations, judicial decisions, and has not been tested on how these laws apply to specific facts. What’s more, DoNotPay’s staff did not test the quality and accuracy of the legal documents and advice generated by its legal-related features. In addition, DoNotPay does not employ attorneys or consult with attorneys with relevant legal expertise to verify the quality and accuracy of its services.
The complaint also alleges that DoNotPay told consumers it could use its AI service to sue for copyright infringement without hiring human lawyers and said the service could check the existence of small business websites based solely on consumers' email addresses. Legal violation. The company claimed that using its service could save businesses up to $125,000 in legal fees, but the FTC said the service was ineffective.
As part of the settlement, DoNotPay agreed to pay a $193,000 penalty and will issue warnings to consumers between 2021 and 2023 to remind them of the limitations of the company's legally relevant products. Additionally, DoNotPay will no longer claim that its services are a substitute for any professional services without evidence.
In addition to the fine against DoNotPay, the FTC has also taken action against a number of other companies that use artificial intelligence services to mislead customers. These include AI writing assistant service Rytr, which the FTC said provided users with tools to create fake AI-generated reviews. In response, the FTC recently announced a final rule prohibiting all companies from creating or selling fake reviews, including AI-generated reviews.
Finally, the FTC also filed a lawsuit against Ascend Ecom, accusing the company of defrauding consumers of at least $25 million by promising that users could open online stores on e-commerce platforms such as Amazon and earn substantial monthly income through its AI tools.
Highlight:
- DoNotPay agreed to pay a $193,000 fine for failing to provide evidence of the effectiveness of its robo-lawyer services.
- The FTC strengthens supervision of companies that use AI to defraud consumers, and other companies such as Rytr have also been punished.
- ? Ascend Ecom is accused of defrauding consumers of $25 million, promising high revenues through AI tools.
This incident warns AI companies that they need to be cautious in publicity, not exaggerate product functions, ensure product quality and reliability, and avoid facing legal risks due to false publicity. The FTC's actions also show that regulatory agencies are paying close attention to the development of the AI industry and it is imperative to strengthen supervision.