Contractors, FTC Is Watching for False AI Claims: Dr. Lance

Contractors nowadays are eager to make bold claims that they are using AI. Dr. Lance Eliot notes that the Federal Trade Commission (FTC) has warned that any false or misleading claims about AI aren’t going to be tolerated. Make sure that your assertions about what AI does and how you are making use of AI are grounded in factual evidence and can be proven as legitimate. Those that fall short might soon have the FTC knocking on their door.

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The Federal Trade Commission recently announced that it will pursue outsized and unfounded claims about artificial intelligence in advertising. This puts contractors on notice as well. If you tout your use of AI, you could be soon coming under the formidable gaze of the FTC.

Here’s the deal. Attorney Michael Atleson of the FTC Division of Advertising Practices wrote an eye-opening article entitled “Keep Your AI Claims In Check”. The gist of the piece was there is abundant temptation to hype and deceptively market AI usage.

“And what exactly is ‘artificial intelligence’ anyway? It’s an ambiguous term with many possible definitions. It often refers to a variety of technological tools and techniques that use computation to perform tasks such as predictions, decisions, or recommendations. 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.”

As noted in the FTC blog posting, one difficulty with the emergence of AI is that its definition is confounding, leaving open a wide variety of legal interpretations. This can be confusing for contractors.

Just because there are bona fide definitional issues underlying AI doesn’t give you unfettered allowance to make unsubstantial claims about it. Contractors that tout their use of AI need to make sure that their stated claims are matched by reality. If you are aiming to win a federal contract by stating that AI makes your services more efficient and effective than your competitors, you’d better be prepared to show proof of those contentions.

Note that the FTC encompasses the Bureau of Consumer Protection, mandated to protect consumers from considered deceptive acts or practices in commercial settings. If companies lie or mislead consumers or even other businesses about tendered products or services, the FTC can wield its governmental powers to trudge such offending firms.

Per the FTC blog posting, here’s something you and the rest of your team need to be exceedingly mindful of. “Marketers should know that — for FTC enforcement purposes — false or unsubstantiated claims about a product’s efficacy are our bread and butter.”

The FTC can go to court to immediately, and potentially permanently, order the stoppage of deceptive practices. In addition, the FTC can seek to freeze the assets of the alleged offending entity and can attempt to get financial penalties assessed. If your firm does get caught in deceitful claims about AI, the cost to cope with the FTC and the reputational harm incurred by your organization could be overwhelming and possibly irreparable.

Why Misleading AI Claims Are Tempting

False contentions concerning AI can stem from the desire to stand out and get added recognition for your services or products. Contractors know they face stiff competition. Given the headline-grabbing potential of AI these days, a contractor would almost be remiss not jumping onto the AI bandwagon.

There are suitable ways to get AI-driven newsworthy attention:

  • Ensure that the claims about AI match directly to your actual services or products.
  • Document the underpinnings of the AI so that tangible evidence supports your contentions.
  • Consider having a third party audit or review your claims and certify they’re legitimate.
  • Don’t let the marketing team go over the top in advertising or promoting your AI usage.
  • Avoid “AI claims creep” whereby you inch upward with each new ad until your claims are out-of-hand.

And there are questionable practices that can get the FTC on your case:

  • Justifying your AI claims by pointing at other contractors that are doing the same (note: you’ll all be in trouble).
  • Relying on your AI developers who proclaim your AI is super-human (note: those AI techies are unlikely to understand the legal ramifications of their mouthing).
  • Blaming government or other businesses that fall for your AI claims—i.e., “that’s on them, not on us” (note: this mindset is going to backfire and you’ll feel the legal wrath accordingly).
  • Assuming no one will catch on to your deceptive claims (note: you’ll continually be at risk and someday a big price will need to be paid).
  • Toeing the outer edge and thinking no one can nail you for ostensibly going over the line (note: the edge is a dicey place to sit and probably untenable to defend).

Get Needed Legal Protection and Insight

Make sure to consult with your attorney or legal counsel about how to safely structure and word your AI marketing and advertising messaging. Well-informed legal advisors can constructively steer you away from trouble and at the same time ensure that you can beneficially publicize your bona fide and newsworthy use of AI.

As AI continues to gain in popularity, law firms are increasingly beefing up their attention to the legal issues. Some law firms have carved out specific niche services for technological developments like AI. See two law firm overviews here and here.

For those of you that aren’t yet embracing AI in your contracting services or products, chances are the day will soon arrive when you’ll end up doing so. At that time, be thoughtful about what you assert the AI is doing for your efforts.

The FTC blog offered had this precautionary warning: “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.”

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Author Information

Dr. Lance Eliot is a globally recognized expert on AI & law and serves as founder and CEO of Techbrium Inc. Formerly a professor at the University of Southern California (USC) where he also headed a pioneering AI research lab, he proudly serves as an Executive Partner and mentor for the USC Masters of Business for Veterans (MBV) program. He has been a global CIO/CTO, writes a popular column for Forbes on AI, and has written several books on AI & Law that are available on Amazon and at other online booksellers.

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