As the excitement around AI-based products and ChatGPT increases and as more companies claim to offer AI-based products, FTC has warned companies and advertisers against overusing and abusing the term AI in their advertising efforts. Read more about the warning here.
As more technology vendors make claims of AI in their tools and technology offerings, the Federal Trade Commission (FTC) has issued a warning to companies that go overboard in their claims in their advertising.Â
FTC Calls AI a Hot Marketing Term That Is Being Abused
In its recent blog postOpens a new window , the agency termed artificial intelligence (AI) a ‘hot marketing term’ and said that some marketers could not stop themselves from abusing it.Â
In the blog post, Michael Atleson, Attorney, FTC Division of Advertising Practices, wrote, “AI hype is playing out today across many products, from toys to cars to chatbots and a lot of things in between. Breathless media accounts don’t help, but it starts with the companies that do the developing and selling.â€
Abusing the term includes exaggerating things that can be accomplished through this technology. For example, given the current state of AI, only certain things can be achieved. However, companies may make claims beyond the technology’s capabilities.Â
Companies may also claim that their AI product may do something better than a non-AI product. However, this may be false. Brands may use this tactic to hike their offerings’ prices or influence buyer decisions. However, the products making these claims may not even work as advertised. Worse, they may cause more harm than good, as certain automation tools may have discriminatory or biased impacts.
Finally, many products claiming that they incorporate AI may not use the technology at all. Atleson said that just using an AI tool during product development does not mean the product has AI in it.
See more: What AI Regulations From the EU and FTC Mean for HR Practitioners
Warning Comes in the Face of Elevated Excitement Around AI
With the development and advancement of AI technology, many technology providers started incorporating it into their products. As the interest in AI has grown over the years, more technology vendors have made tall claims to offer AI-based products. That said, technology investments hit a bumpy road for some time due to various reasons. With the announcement of ChatGPT by OpenAI, there has been a renewed and elevated interest in AI tools. Several startups are seeing fresh investments injected to support AI-based product development.
With the excitement and noise around AI and ChatGPT growing louder, FTC has urged marketers to keep the following points in mind:
- Do not exaggerate the AI product’s performance capabilities.
- Do not promise that the AI product is better than a non-AI product without adequate proof.
- Be aware of the possible risks and impacts of the product before releasing it into the market.
- Ensure that the product actually incorporates AI and not just leverages the technology in its development process.
If companies or advertisers are caught exaggerating claims, how harsh would the FTC crackdown be? While it is yet to be seen, Atleson emphasized, “Marketers should know that — for FTC enforcement purposes — false or unsubstantiated claims about a product’s efficacy are our bread and butter.†He ended the warning by saying, “Whatever it can or can’t do, AI is important, and so are the claims you make about it. You don’t need a machine to predict what the FTC might do when those claims are unsupported.â€
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