AI Lawyer Service agrees to pay $280,000 fine after being sued by the Federal Trade Commission for false advertising

The Federal Trade Commission (FTC) has filed lawsuits against several companies as part of its Operation AI Comply, a crackdown on hyped and fraudulent schemes related to artificial intelligence (AI). Among them is DoNotPay , a company that claims to provide the 'world's first AI lawyers.' The FTC claims that the company has not tested its AI chatbot to ensure that its output is at the same level as a human lawyer.

FTC Announces Crackdown on Deceptive AI Claims and Schemes | Federal Trade Commission
https://www.ftc.gov/news-events/news/press-releases/2024/09/ftc-announces-crackdown-deceptive-ai-claims-schemes

DoNotPay has to pay $193K for falsely touting untested AI lawyer, FTC says | Ars Technica
https://arstechnica.com/tech-policy/2024/09/startup-behind-worlds-first-robot-lawyer-to-pay-193k-for-false-ads-ftc-says/

DoNotPay started in 2015 as a service offering free assistance in disputing parking tickets, and has since expanded rapidly to cover more than 200 areas of law, from breach of contract claims to divorce mediation.

Starting in 2019, DoNotPay became a paid service that cost $36 (about 5,200 yen) for two months, and expanded its service with bold advertising slogans such as 'The world's first AI lawyer' and 'Anyone can sue with the touch of a button.'

DoNotPay, a free software that advises people not to pay fines, successfully cancels 160,000 parking tickets - GIGAZINE

However, DoNotPay has been sued by users. For example, in 2023, a user sued DoNotPay for providing 'substandard results' in preparing application documents for small claims and employment discrimination lawsuits. In this lawsuit, DoNotPay showed an attitude of fighting using the AI lawyers provided by its service, but ultimately stopped using the AI lawyers due to a flood of threats from the bar association and the judgment that the legal risks were 'too high.'

AI-powered 'robot lawyer' court appearance canceled due to threats from human lawyers to 'throw him in jail' - GIGAZINE

According to the FTC's investigation, DoNotPay's service was essentially a chatbot that used ChatGPT's API, and it did not use models trained on the latest laws and precedents. It was also found that the testimonials used in DoNotPay's advertisements were quoted from opinion articles written by high school students, and that DoNotPay did not employ human lawyers to verify the quality of the service or the accuracy of the answers.

According to the FTC, DoNotPay agreed to a settlement with the FTC, which included provisions such as paying $193,000, informing users who signed up for the service between 2021 and 2023 of the feature restrictions, and prohibiting DoNotPay from making unfounded claims that it is a substitute for law firms.

'DoNotPay is pleased to have worked constructively with the FTC to resolve this matter and fully resolve these issues,' a DoNotPay spokesperson told Ars Technica. However, the company also claimed that the complaint 'related to a service that was discontinued several years ago and affected a few hundred of our millions of customers.'

'It is illegal to use AI tools to trick, mislead, or defraud people, and the FTC's enforcement actions make clear that there is no exemption from the law for AI. By cracking down on unfair or deceptive practices in these markets, the FTC is ensuring that honest companies and innovators have a level playing field and consumers are protected,' said FTC Chairman Lina M. Khan.