FTC warns tech companies about over-hyping AI claims

"Marketers should know that — for FTC enforcement purposes — false or unsubstantiated claims are our bread and butter.”

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As artificial intelligence hype spins ever higher, the FTC is warning tech companies against making unsubstantiated claims about AI.

“We’ve already warned businesses to avoid using automated tools that have biased or discriminatory impacts,” Michael Atleson, an attorney in the division of advertising practices, wrote in a post on the commission’s blog. “But the fact is that some products with AI claims might not even work as advertised in the first place. … Marketers should know that — for FTC enforcement purposes — false or unsubstantiated claims about a product’s efficacy are our bread and butter.”

The feeding frenzy for all things AI-related began at the end of November when OpenAI launched ChatGPT. Within a week more than a million people had signed up for the service. By the end of February that number was at 100,000,000. This was spurred, in part, by Microsoft announcing it would be adding ChatGPT to most of its products. Even Google’s bungled announcement for Bard, its own AI-powered chatbot, hasn’t cooled things down.

“[Artificial intelligence is] an ambiguous term with many possible definitions,” Atleson wrote in the amusing and sometimes literary post. “But one thing is for sure: it’s a marketing term. Right now it’s a hot one. And at the FTC, one thing we know about hot marketing terms is that some advertisers won’t be able to stop themselves from overusing and abusing them.”

Dig deeper: How AI can help your marketing right now

The post lays out four of the criteria the FTC will use for examining claims:

  • Are you exaggerating what your AI product can do?
  • Are you promising that your AI product does something better than a non-AI product?
  • Are you aware of the risks?
  • Does the product actually use AI at all? 

To the last point, Atleson directly warns companies the FTC will examine more than marketing materials in its investigations. It will use in-house technologists to “look under the hood and analyze other materials to see if what’s inside matches up with your claims.”

The warning comes as the FTC is increasing its focus on high tech companies. Earlier this month the agency launched an office of technology and plans to more than double the number of technologists it has on staff.

Why we care. We’ve received an incredible number of press releases about AI in the past month. Some were about integrations already in place and some about future plans to do so. A few of the latter did read as though these plans were very recent, but that doesn’t mean they won’t happen. (Hat tip to the company with the honesty to say a new capability was “AI like.”)

Having the FTC examine these claims is a great help to martech buyers. People buying a new platform frequently do so because it can help them in areas where they have little or no expertise. They have their hands full assessing the platform’s claims and capabilities. Hopefully, they now don’t have to worry if that expensive new solution really does use AI. 

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About the author

Constantine von Hoffman
Constantine von Hoffman is managing editor of MarTech. A veteran journalist, Con has covered business, finance, marketing and tech for CBSNews.com, Brandweek, CMO, and Inc. He has been city editor of the Boston Herald, news producer at NPR, and has written for Harvard Business Review, Boston Magazine, Sierra, and many other publications. He has also been a professional stand-up comedian, given talks at anime and gaming conventions on everything from My Neighbor Totoro to the history of dice and boardgames, and is author of the magical realist novel John Henry the Revelator. He lives in Boston with his wife, Jennifer, and either too many or too few dogs.

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