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AI Tools Can “Turbocharge” Fraud and Scams Warns FTC

Updated: Dec 19, 2023

The U.S. Federal Trade Commission (FTC) is sounding the alarm on the potential of artificial intelligence (AI) tools to be used for criminal or deceptive activities.

U.S. FTC Chair Lina Khan
U.S. FTC Chair Lina Khan. Credit: Reuters

Lina Khan, Chair of the FTC, warned House lawmakers last week that the "turbocharging of fraud and scams that could be enabled by these tools are a serious concern", as CNN reports. The warning comes as a response to an inquiry over how the agency was working to protect Americans from the harms that may come from modern technological advancements, specifically AI tools like ChatGPT.


"We’ve been putting market participants on notice that instances in which AI tools are effectively being designed to deceive people can place them on the hook for FTC action," she said during the address.


Khan also said she's embedding technologists across the FTC, covering both the consumer protection side and the competition side, to make sure any AI-related issues are properly identified and handled.


Meanwhile, FTC Commissioner Alvaro Bedoya noted that AI companies aren't exempt from being investigated by the agency under a range of statutes as lawmakers continue to debate about laws concerning the emerging technology. He also said can be held liable for any malpractice, and cannot argue that their algorithms are a black box.


"Our staff has been consistently saying our unfair and deceptive practices authority applies, our civil rights laws, fair credit, Equal Credit Opportunity Act, those apply," he said. "There is law, and companies will need to abide by it."

AI
Credit: Reuters

The FTC has previously issued extensive public guidance to AI companies, and the agency last month received a request to investigate OpenAI over claims that the company behind ChatGPT has misled consumers about the tool’s capabilities and limitations.


The agency in February published a public guidance to AI companies, reminding them not to mislead consumers and not exaggerate what their products can do. It also received a request last month to investigate the Microsoft-backed AI startup OpenAI over claims that ChatGPT misled consumers about its capabilities and limitations.


Much of the concern surrounding modern generative AI lies in how it can be used by criminals to create content that can cause harm. One Arizona mom, for example, almost fell victim to a kidnapping scam after criminals leveraged AI to clone her daughter's voice. A German tabloid, meanwhile, published what it claimed was "the first interview" with former Formula One driver Michael Schumacher, who hasn't been seen in public since suffering a serious brain injury in 2013, only to reveal the article had been generated by an AI. Such cases underscore how the technology can be abused in the wrong hands, on top of other regulatory concerns, which include privacy, bias and discrimination.

 
  • U.S. FTC Chair Lina Khan sounded the alarm on AI tools, warning House lawmakers last week that the "turbocharging of fraud and scams that could be enabled by these tools are a serious concern".

  • The warning comes as a response to an inquiry over how the agency was working to protect Americans from the harms that may come from modern technological advancements, specifically AI tools like ChatGPT.

  • Khan also said she's embedding technologists across the FTC, covering both the consumer protection side and the competition side, to make sure any AI-related issues are properly identified and handled.










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