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The Federal Trade Commission has streamlined its process for gathering information to investigate potential unlawful market behavior by nonpublic entities that utilize AI, or claim to use it.

The FTC is concerned about a wide range of improper usages of AI in the marketplace. There is the potential that generative AI could lead to monopolies, and increase bias and discrimination.  Additionally, the number of AI voice cloning scams and other misuses of AI is steadily rising.

The FTC voted 3-0 last week, Nov. 21, on a resolution that streamlines the commission’s issuance of subpoena-like Civil Investigations Demands, or CIDs. The resolution allows staff to use the compulsory process in AI-related investigations, without having to get a full Commission vote. Previously, a full Commission vote was needed for a CID.

When a CID is issued, staff gathers documents, testimony, and any other evidence that could give the Commission cause to act against fraud, scams, and bad business practices. The FTC’s mission is to “protect the public from deceptive or unfair business practices and from unfair methods of competition through law enforcement, advocacy, research, and education.”

Even before the resolution vote, the FTC ramped up its scrutiny related to AI. In July, it issued a CID against OpenAI, the creator of ChatGPT. The Commission stated that the purpose of the CID was to determine whether OpenAI had engaged in “unfair or deceptive privacy or data security practices, or “had engaged in unfair or deceptive practices relating to risks of harm to consumers, including reputational harm . . .”

The FTC in October indicated through its technology blog that it would continue to increase its scrutiny of AI products in the marketplace.  In a post titled “Consumers Are Voicing Concerns About AI,” the Commission stated that it is keeping a close watch on the marketplace, and company conduct, as more AI products emerge. “We are ultimately invested in understanding and preventing harms as this new technology reaches consumers and applying the law. In doing so, we aim to prevent harms consumers and markets may face as AI becomes more ubiquitous.”

On July 13, 2023, FTC Chair Lina Khan testified during an oversight hearing by the House Judiciary Committee about the impact of generative AI in the marketplace.

“These moments of technological disruption, what you have is game changing technologies entering the market, these moments oftentimes provide a lot of opportunity for disruption and for displacing some of the existing incumbents and giants, so there’s always a chance that that will be the effect,”  Ms. Kahn said. She added “We all need to be very vigilant to make sure that this potentially transformative technology is not further consolidating market power in ways that could really harm competition.”

And on November 7, the Commission submitted comments to the U.S. Copyright Office, stating, “The manner in which companies are developing and releasing generative AI tools and other AI products . . . raises concerns about potential harm to consumers, workers, and small businesses.” In that same statement, the FTC said it continues to explore the risks associated with the use of AI, “including violations of consumers’ privacy, automation of discrimination and bias, and turbocharging of deceptive practices, imposters schemes and other types of scams.”

One of the more nefarious ways that scammers prey upon consumers is with AI-enabled voice cloning. While the technology behind it has beneficial applications, such as with individuals who have lost their voice, it can be used to impersonate friends, family, co-workers, and even celebrities. Recently, Gary Schildhorn, a corporate attorney from Philadelphia, testified to a U.S. Senate panel that was holding a hearing on Artificial Intelligence and Fraud, that he was almost duped into giving scammers $9,000, after he took a call from what he believed at the time to be his son. The caller was not his son, but AI voice cloning. Fortunately, his son called him through Facetime, before he sent any money.

“I sat there in my car, I was physically affected by that, it was shock, and anger, and relief,” Mr. Schildhorn said. “I had been involved in consumer fraud cases throughout my career, and I almost fell for that,” he said. He said that since that call, he has continued to receive dozens of calls using the same fraud scheme.

The Commission is the clearinghouse for reports from consumers about the problems they experience in the marketplace.  Those reports are stored in the Consumer Sentinel Network, an online database that is accessible to only law enforcement agencies. There was a total of 5.2 million reports in 2022. Identity theft reports accounted for 22 percent of that total, an area of fraud that is particularly susceptible to AI, through deepfake manipulation with generated images, videos and audio.