FTC Warns AI Companies Against Malpractice And Fake Advertising To Avoid Heavy Penalties

The FTC is making sure all leading AI firms stay on the tip of their toes in terms of honoring clauses mentioned in their terms of service. Furthermore, they warned against misleading practices including fake ads that don’t honor the user’s privacy.

The warning came through a blog post that was published on Tuesday where it called out the model as a service firm, better known as AI companies, from taking part in such acts if they wished to avoid heavy penalties.

2023 was all about the boom of generative AI and this year seems to be no exception to that thought. Therefore, the FTC is making sure that those firms that train their models and then go on selling access to other places like shops and banks would now be forced to face major disciplinary action.

They similarly added how there was no kind of excuse or exemption for such behavior and therefore they would be dealt with stringently as the crime went against the law. Whether it was done implicitly or explicitly, that is not a matter of concern, sources added as it was wrong in all regards.

Meanwhile, the agency also spoke about how it could bring about punishments against AI tech giants who broke promises by making use of user data for model training and updating purposes.

The FTC says it brought plenty of lawsuits in the past against companies like BetterHelp and GoodRx because it disclosed user data for the sake of gaining benefits from ad targeting. This was after they had promised to keep all such data confidential but failed in that regard.

When an organization does not openly or transparently tell clients about what kind of data will be used and where it will be used, it’s a major breach of their terms of service. This is the right of so many users of the industry and therefore must be dealt with unjustly.

Firms that get rid of any kind of material facts like how data is collected or used might be instead of serious consequences in the form of enforcement actions.

The agency also boldly delineated how all AI giants should follow commitments made to clients from day one of taking them on board and in the loop. This was regardless of how a contract or promise was made. For example, any promise made via an ad, online marketplace, or terms of service on the website must be carefully carried out.

The agency mentioned how it was now warning AI firms against rolling out key disclosures that were disguised behind hyperlinks or fine print as that again stopped the user from understanding what was going on.

Seeing such strict actions come into play by the FTC really is a sign of relief for users who feel a lot of regulation about the world of AI was required to ensure their safety and privacy were not compromised.

Data transparency for AI models: Firms selling AI model access must be upfront about data collection and usage, or face consequences.
Image: Digital Information World - AIgen

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