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The US Federal Trade Commission (FTC) wrote a beware notice to companies that are riding the artificial intelligence train lately as the agency believes that marketers can take advantage of the hype to make unsubstantiated claims.

In a blog post shared by one of the FTC’s attorneys from the Division of Advertising Practices, Michael Atleson, the regulatory agency outlined some of its views about the rising popularity of this technology and the dangers that this poses to consumers.

The first notable comment made by Atleson is that he deemed AI as a marketing term and not a technological advancement per se. The reason for this, the attorney reasons, is that the definition of what constitutes AI is not entirely clear.

This creates room for the indiscriminate use of the term by advertisers and businesses to take advantage of the momentum that the technology is living to make claims that are just not true.

Four Instances Where AI Claims Can Be Considered Harmful by the FTC

Atleson highlighted four cases in which AI-related claims could be considered misleading or false by the FTC, starting with exaggerations about what an AI-powered product can do. In this regard, the regulator cautioned businesses not to advertise a level of performance that the technology cannot deliver at its current state.

In addition, the FTC is also warning marketers about upselling AI products whose inherent characteristics and capabilities are not too different from the original version just to charge a higher price for adding the AI label to its name.

“It’s not uncommon for advertisers to say that some new-fangled technology makes their product better – perhaps to justify a higher price or influence labor decisions. You need adequate proof for that kind of comparative claim, too, and if such proof is impossible to get, then don’t make the claim”, Atleson argued.

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Moreover, and this is something that tech experts have warned about for years, many companies are making false claims that their products use some kind of AI technology to function when the reality is that this is not the case at all.

Since the inner works of AI are hard, if not impossible, to be perceived by a user, companies have managed to make these claims without being scrutinized enough to make sure that they are true.

In this regard, the FTC will now be closely monitoring the businesses that are allegedly using AI to power their products and they have qualified personnel to “look under the hood” to analyze if there is proof that this technology is being used as advertised.

Last but not least, Atleson warns that companies should be aware of the risks involved when using this kind of technology in their products and should appropriately inform consumers about them.

In this regard, he emphasized that businesses won’t get away with blaming the developers of the underlying technology as those risks are assumed by the business once the software is added to the mix.

More Companies Are Jumping on the AI Trend and the FTC Knows

The warning comes at a point when the list of companies offering AI-powered versions of their products and services is growing by the minute. Large companies have been among the first to ride the wave with Microsoft (MSFT) launching its smart version of the Bing search engine and Google rushing to release a competing product called Bard.

However, many other firms in a wide variety of sectors including cybersecurity, online dating, social media, and newspapers have also been embracing the technology for different purposes.

A new era is definitely dawning and, same as with everything new and relatively misunderstood, so are the risks associated with using a largely untested software. What seems to be clear is that, this time, the FTC has taken notice.

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