The Federal Trade Commission is cracking down on “deceptive AI claims and schemes,” specifically companies that tout AI as capable of doing something it cannot do.

The FTC is taking various forms of action against five companies, all of which promoted AI-based services that failed to live up to the hype and were never able to deliver what was promised. The five companies are DoNotPay, Ascend Ecom, Ecommerce Empire Builders, Rytr, and FBA Machine.

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DoNotPay

DoNotPay is a company that touted its AI assistant as “the world’s first robot lawyer,” promising customers they could avoid costly attorney fees by using its services.

According to the FTC’s complaint, DoNotPay promised that its service would allow consumers to “sue for assault without a lawyer” and “generate perfectly valid legal documents in no time,” and that the company would “replace the $200-billion-dollar legal industry with artificial intelligence.” DoNotPay, however, could not deliver on these promises. The complaint alleges that the company did not conduct testing to determine whether its AI chatbot’s output was equal to the level of a human lawyer, and that the company itself did not hire or retain any attorneys.

DoNotPay has agreed to pay $193,000 to settle the FTC’s claims, as well as provide a warning to customers about the limitations of the service.

Ascend Ecom

Ascend Ecom promised customers that its AI tools could help them quickly generate online storefronts for passive income opportunities.

The scheme is run by William Basta and Kenneth Leung, and it has operated under a number of different names since 2021, including Ascend Ecom, Ascend Ecommerce, Ascend CapVentures, ACV Partners, ACV, Accelerated eCom Ventures, Ethix Capital by Ascend, and ACV Nexus.

According to the FTC’s complaint, the operators of the scheme charge consumers tens of thousands of dollars to start online stores on ecommerce platforms such as Amazon, Walmart, Etsy, and TikTok, while also requiring them to spend tens of thousands more on inventory. Ascend’s advertising content claimed the company was a leader in ecommerce, using proprietary software and artificial intelligence to maximize clients’ business success.

The FTC’s lawsuit has resulted in “a federal court issued an order temporarily halting the scheme and putting it under the control of a receiver.”

Ecommerce Empire Builders

Similar to Ascend Ecom, Ecommerce Empire Builders promised users an easy way to make millions, either through its $2,000 training programs, or through buying one of its “done for you” online storefronts.

The complaint alleges that EEB’s CEO, Peter Prusinowski, has used consumers’ money – as much as $35,000 from consumers who purchase stores – to enrich himself while failing to deliver on the scheme’s promises of big income by selling goods online. In its marketing, EEB encourages consumers to “Skip the guesswork and start a million-dollar business today” by harnessing the “power of artificial intelligence” and the scheme’s supposed strategies.

In social media ads, EEB claims that its clients can make $10,000 monthly, but the FTC’s complaint alleges that the company has no evidence to back up those claims. Numerous consumers have complained that stores they purchased from EEB made little or no money, and that the company has resisted providing refunds to consumers, either denying refunds or only providing partial refunds.

Much like Ascend Ecom, a federal court has temporarily halted the scheme until its fate can be decided in court.

Rytr

Rytr advertised an AI “writing assistant” that was designed to generate reviews based on minimal input. As with the other companies on this list, Rytr’s services failed to deliver what was promised.

According to the FTC’s complaint, Rytr’s service generated detailed reviews that contained specific, often material details that had no relation to the user’s input, and these reviews almost certainly would be false for the users who copied them and published them online. In many cases, subscribers’ AI-generated reviews featured information that would deceive potential consumers who were using the reviews to make purchasing decisions. The complaint further alleges that at least some of Rytr’s subscribers used the service to produce hundreds, and in some cases tens of thousands, of reviews potentially containing false information.

The FTC’s proposed order that would settle the complaint would prohibit the company from ever selling or marketing any service that generates reviews or testimonials.

FBA Machine

Like Ecommerce Empire Builders and Ascend Ecom, FBA Machine promised users guaranteed income via AI-powered online storefronts, taking them for more than $15.9 million.

The complaint alleges that Bratislav Rozenfeld (also known as Steven Rozenfeld and Steven Rozen) has operated the scheme since 2021, initially as Passive Scaling. When Passive Scaling failed to live up to its promises and consumers sought refunds and brought lawsuits, Rozenfeld rebranded the scheme as FBA Machine in 2023. The rebranded marketing materials claim that FBA Machine uses “AI-powered” tools to help price products in the stores and maximize profits.

The scheme’s claims were wide-ranging, promising consumers that they could operate a “7-figure business” and citing supposed testimonials from clients who “generate over $100,000 per month in profit.” Company sales agents told consumers that the business was “risk-free” and falsely guaranteed refunds to consumers who did not make back their initial investments, which ranged from tens of thousands to hundreds of thousands of dollars.

Like the other two companies, a federal court has ordered a temporary halt to FBA Machine’s operation until the matter is decided permanently.

“Using AI tools to trick, mislead, or defraud people is illegal,” said FTC Chair Lina M. Khan. “The FTC’s enforcement actions make clear that there is no AI exemption from the laws on the books. By cracking down on unfair or deceptive practices in these markets, FTC is ensuring that honest businesses and innovators can get a fair shot and consumers are being protected.”