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The US Federal Trade Commission (FTC) fined DoNotPay, a startup that provided paid legal services using a chatbot, for 193 thousand dollars.
The reason for the penalty was the lack of human lawyers in the company's staff and the fact that it did not conduct tests for the compliance of the chatbot with the necessary skills. DoNotPay was just one of five companies that came to the attention of the FTC for providing various services using chatbots and generative AI ("Operation AI Comply").
However, investigations are ongoing against four other companies, whose actions, among other things, are fraught with more serious punishments, since they concerned financial fraud.
According to the FTC's official announcement, the claims against DoNotPay are related to the poor quality of services, not just formal non-compliance with the regulator's requirements.
Legal bots made particularly serious mistakes when checking small business websites for compliance with legal requirements. At the same time, the price of such a mistake, as the head of the department's commission, Lina Khan, warned, is fraught with costs of 125 thousand dollars.
DoNotPay went for a pre-trial settlement. In addition to the $193,000 fine, it also includes notifying customers of the company's offerings restrictions and possible risks.
"The FTC's enforcement actions make it clear that the use of artificial intelligence is not an indulgence to comply with laws. By cracking down on unfair or outright fraudulent practices in these markets, the FTC ensures that honest businesses and innovators can get a fair chance and consumers are protected", Lina Han commented on the results of the investigations under Operation AI Comply.
Source
The reason for the penalty was the lack of human lawyers in the company's staff and the fact that it did not conduct tests for the compliance of the chatbot with the necessary skills. DoNotPay was just one of five companies that came to the attention of the FTC for providing various services using chatbots and generative AI ("Operation AI Comply").
However, investigations are ongoing against four other companies, whose actions, among other things, are fraught with more serious punishments, since they concerned financial fraud.
According to the FTC's official announcement, the claims against DoNotPay are related to the poor quality of services, not just formal non-compliance with the regulator's requirements.
Legal bots made particularly serious mistakes when checking small business websites for compliance with legal requirements. At the same time, the price of such a mistake, as the head of the department's commission, Lina Khan, warned, is fraught with costs of 125 thousand dollars.
DoNotPay went for a pre-trial settlement. In addition to the $193,000 fine, it also includes notifying customers of the company's offerings restrictions and possible risks.
"The FTC's enforcement actions make it clear that the use of artificial intelligence is not an indulgence to comply with laws. By cracking down on unfair or outright fraudulent practices in these markets, the FTC ensures that honest businesses and innovators can get a fair chance and consumers are protected", Lina Han commented on the results of the investigations under Operation AI Comply.
Source
