AI Lawyers – How Deceptive AI Claims And Schemes Are Changing Business Marketing

By Frances Ricks

Artificial intelligence (“AI”) took its first major evolutionary step in 2023 with the release of ChatGPT.[1] Since then, businesses have been experimenting with different kinds of AI to test its capabilities and limitations.[2] In September 2024, the Federal Trade Commission (“FTC”) announced its plan to crack down on deceptive AI claims and schemes.[3] The FTC has taken action against multiple companies for their use of AI, including DoNotPay, a company that claims to offer an AI service that is “the world’s first robot lawyer.”[4]

Section 5(a) of the Federal Trade Commission Act prohibits “unfair or deceptive acts or practices in or affecting commerce.”[5] Deceptive practices involve a material representation, omission, or practice that is likely to mislead a consumer acting reasonably in the circumstances.[6] An act or practice is unfair if it causes or is likely to cause substantial injury to consumers which is not reasonably avoidable by consumers themselves and not outweighed by countervailing benefits to consumers or competition.[7]

DoNotPay is an online subscription service for consumers seeking assistance with a range of commercial issues and legal issues.[8] The company used artificial intelligence (“AI”) as a marketing tool and described the service as “the world’s first robot lawyer” and an “AI lawyer” capable of performing legal services.[9] Further, the company utilized OpenAI’s ChatGPT software to develop the service.[10] DoNotPay’s mission “utilizes artificial intelligence to help consumers fight against large corporations and solve their problems, like beating parking tickets, appealing bank fees, and stopping robocalls.”[11] The company has numerous advertisements conveying that they are the world’s first AI lawyer and can help with legal needs.[12]

The FTC argues that DoNotPay did not test whether the service’s law-related features operated like a human lawyer.[13] The company represented, directly or indirectly, expressly or by implication, that the service’s AI and other relevant services act like a human lawyer, in violation of Section 5 of the Federal Trade Commission Act.[14] Further, the complaint expresses numerous examples of false claims by the company.[15] DoNotPay tested the quality and accuracy of the legal documents but has not employed attorneys to test the quality and accuracy of the service’s law-related features.[16] These legal claims from DoNotPay go directly against section 5(a) of the Federal Trade Commission Act, which is FTC’s main argument.[17] Because of this, DoNotPay has agreed to pay the FTC $193,000 to settle the claims.[18]

This case, and the other cases the FTC has filed recently, exhibit the crackdown on the use of emerging AI.[19] These cases affect how businesses will use AI. FTC enforcement under the Federal Trade Commission Act represents a new landscape for companies using AI, and the scrutiny of the use and marketing of AI services.[20] Companies must test the limits of the AI services and ensure they comply with the law when the product leaves their hands.[21] Further, the FTC noted that if a company offers the product, it cannot claim ignorance of the product’s capabilities in defense of a deception charge.[22] Before taking AI to market, companies must consider ethical and fairness concerns, have a representative data set, ensure the model accounts for bias, and utilize accurate data-based predictions.[23]

[1] Francis Sideco, The Dawn of Creation: 2023 Rise of Generative AI, Forbes (Apr. 12, 2023, 1:30 PM), https://www.forbes.com/sites/tiriasresearch/2023/04/12/the-dawn-of-creation-2023-rise-of-generative-ai/.

[2] David Morel, The Future Of Work: How Will AI Change Business?, Forbes (Aug. 31, 2023, 10:44 AM), https://www.forbes.com/sites/davidmorel/2023/08/31/the-future-of-work-how-will-ai-change-business/.

[3] Press Release, FTC Announces Crackdown on Deceptive AI Claims and Schemes, Fed. Trade Comm’n (Sept. 25, 2024), https://www.ftc.gov/news-events/news/press-releases/2024/09/ftc-announces-crackdown-deceptive-ai-claims-schemes.

[4] Id.

[5] 15 U.S.C. § 45(a).

[6] Fed. Trade Comm’n, Opinion Letter on FTC Policy Statement on Deception (Oct. 14, 1983).

[7] 15 U.S.C. § 45(n).

[8] Complaint at 1, In the Matter of DoNotPay, Inc., (2024) (No. 232-3042), 2024 WL 4382229 (F.T.C.), https://www.ftc.gov/system/files/ftc_gov/pdf/DoNotPayInc-Complaint.pdf.

[9] Id. at 1–2.

[10] Id. at 14.

[11] Our Mission, DoNotPay, https://donotpay.com/about/ (last visited Oct. 30, 2024).

[12] Complaint at 3-6, supra note 8.

[13] Id. at 16.

[14] Id.

[15] Id.

[16] Id. at 14.

[17] Id. at 16.

[18] Rhys Dipshan, FTC Fines DoNotPay $193,000, Alleging False Claims Over ‘Robot Lawyer’ Service, Law.Com (Sept. 25, 2024, 4:22 PM), https://www.law.com/legaltechnews/2024/09/25/ftc-fines-donotpay-193000-alleging-false-claims-over-robot-lawyer-service/?slreturn=20241103115121.

[19] Duncan Riley, FTC Cracks Down on Misleading AI-Powered Business Schemes in New Initiative, SiliconANGLE (Sept. 25, 2024, 7:08 PM), https://siliconangle.com/2024/09/25/ftc-cracks-misleading-ai-powered-business-schemes-new-initiative/.

[20] Id.