DoNotPay Agrees to $193,000 Settlement with FTC for Alleged Deception Using AI Service

TapTechNews September 26th news, the US Federal Trade Commission (FTC) announced on Tuesday that the company DoNotPay, which claims to offer the world's first robot lawyer, has agreed to a $193,000 (TapTechNews note: currently about 1.357 million Chinese yuan) settlement agreement with the agency. This move is part of the FTC's newly launched enforcement action Operation AI Comply, aiming to crack down on companies that use AI services to deceive or defraud consumers.

According to the FTC's complaint, DoNotPay claimed that it will replace the $200 billion legal industry with artificial intelligence and stated that its robot lawyer can replace the expertise and output of human lawyers to generate legal documents. However, the FTC said that the company made such a statement without any test support. The complaint stated that:

No technology of the service has been trained to master comprehensive and up-to-date federal and state laws, regulations and judicial decisions, or to apply these laws to factual patterns. Employees of DoNotPay did not test the quality and accuracy of the legal documents and advice generated by most of the service's legal-related functions. DoNotPay did not hire lawyers, nor did it retain lawyers, nor did it retain lawyers with relevant legal expertise to test the quality and accuracy of the service's legal-related functions.

The complaint also stated that the company even told consumers that they can use the company's AI service to file a lawsuit for assault without hiring a human lawyer, and that the company can check whether there are legal violations on small business websites based solely on the consumers' email addresses. DoNotPay claimed that this will save businesses $125,000 in legal fees, but the FTC said the service has no effect.

The FTC said that DoNotPay has agreed to pay $193,000 to settle the accusations against it and to warn consumers who subscribed to the service between 2021 and 2023 about the limitations of its legal-related products. DoNotPay will also not be allowed to claim that it can replace any professional service unless evidence is provided.

The FTC also announced actions against other companies that use AI services to mislead consumers. Among them is the AI writing assistant service Rytr, and the FTC said the company provides subscribers with tools to create AI-generated false reviews.