Federal Regulators Target Unsubstantiated AI Claims, Adviser AI Washing & Cloned Robocalls

In its 25 September 2024 Operation AI Comply sweep, the FTC announced that DoNotPay agreed to a proposed administrative consent order resolving allegations that the company marketed "the world's first robot lawyer" as a substitute for a qualified human lawyer without testing whether its output matched human-lawyer quality. Under the proposed order ($193,000 consumer redress and mandatory limitation notices), respondent settled without admitting or denying the FTC's allegations.

Statutory Authority

Section 5(a) of the FTC Act (15 U.S.C. § 45(a))

Reported Scope / Remedy

$193,000 redress & consumer notice requirement

According to the FTC's 25 September 2024 Operation AI Comply announcement, the Commission filed a federal civil complaint alleging that operators of Ascend Ecom extracted more than $25 million from consumers through deceptive claims that proprietary AI software would launch and run passive five-figure monthly e-commerce storefronts. Filing of a federal complaint states regulator allegations only unless and until determined by a court.

Statutory Authority

FTC Act Section 5(a) & Business Opportunity Rule (16 CFR Part 437)

Reported Scope / Remedy

Alleged consumer scheme exceeding $25,000,000

As reported in the FTC's 25 September 2024 Operation AI Comply release, the Commission filed a federal civil complaint alleging that Ecommerce Empire Builders charged consumers upfront fees reaching $35,000 while making unsubstantiated Millionaire-storefront earnings claims tied to "AI-powered" e-commerce automation. Civil complaint statements constitute regulator allegations only, subject to court determination.

Statutory Authority

FTC Act Section 5(a) & Business Opportunity Rule (16 CFR Part 437)

Reported Scope / Remedy

Alleged upfront storefront fees up to $35,000

Included in the FTC's 25 September 2024 Operation AI Comply announcement following an earlier June 2024 court filing, the FTC alleged that FBA Machine (formerly operating as Passive Scaling) promoted guaranteed profits from "AI-powered" automated storefronts that cost consumers more than $15.9 million. All civil complaint counts remain regulator allegations unless and until determined by the court.

Statutory Authority

FTC Act Section 5(a) & Business Opportunity Rule (16 CFR Part 437)

Reported Scope / Remedy

Alleged guaranteed-profit losses exceeding $15,900,000

In its 25 September 2024 Operation AI Comply announcement, the FTC announced a proposed administrative consent proceeding regarding Rytr LLC's "Testimonial & Review" AI writing feature, negotiated without admitting or denying allegations. Because Commission administrative orders can be modified, set aside, or reopened, readers should inspect the official ftc.gov docket directly for dissenting statements and subsequent Commission order updates.

Statutory Authority

Section 5(a) of the FTC Act (15 U.S.C. § 45(a))

Reported Scope / Remedy

Administrative consent proceeding regarding AI review generation

According to SEC Press Release 2024-36 (Release No. IA-6573), the SEC entered a settled administrative order finding that registered investment adviser Delphia (USA) Inc. made unsubstantiated statements from 2019 through 2023 in Form ADV filings, press releases, and website copy claiming it incorporated collective client data into machine-learning investment algorithms. Without admitting or denying the SEC's findings, Delphia consented to a censure, a cease-and-desist order, and a $225,000 civil penalty.

Statutory Authority

Investment Advisers Act Sections 206(2), 206(4) & Rules 206(4)-1, 206(4)-7

Reported Scope / Remedy

$225,000 civil penalty, censure & cease-and-desist order

In SEC Press Release 2024-36 (Release No. IA-6574, 18 March 2024), the Commission announced settled Marketing Rule charges concerning unsubstantiated 2023 statements by Global Predictions Inc. claiming to be the "first regulated AI financial advisor" and advertising "expert AI-driven forecasts." Without admitting or denying the SEC's findings, Global Predictions consented to a censure, a cease-and-desist order, compliance undertakings, and a $175,000 civil penalty.

Statutory Authority

Investment Advisers Act Sections 206(2), 206(4) & Rule 206(4)-1 (Marketing Rule)

Reported Scope / Remedy

$175,000 civil penalty, censure & compliance undertakings

On 8 February 2024, the Federal Communications Commission unanimously adopted a Declaratory Ruling in CG Docket No. 02-278 confirming that voice-cloning and AI-generated voices used in outbound telephone calls qualify as "artificial" voices under the Telephone Consumer Protection Act (TCPA). Outbound AI voice calls initiated without prior express consent violate federal law and expose callers to statutory damages and State Attorney General injunctive actions.

Statutory Authority

Telephone Consumer Protection Act (47 U.S.C. § 227(b))

Reported Scope / Remedy

Nationwide TCPA statutory liability & State AG enforcement authority