‘Robot Lawyer’ Company Hit with $193,000 Fine in FTC’s AI Enforcement Action

DoNotPay, a company that touted itself as offering the “world’s first robot lawyer,” has reached a $193,000 settlement with the Federal Trade Commission (FTC). This settlement is part of Operation AI Comply, the FTC's initiative aimed at addressing deceptive practices by businesses using AI technologies.

The FTC's complaint highlighted that DoNotPay claimed it could "replace the $200-billion dollar legal industry with artificial intelligence," stating that its “robot lawyers” could match the expertise of human lawyers in generating legal documents. However, the FTC asserts that these claims were made without any testing to substantiate them. The complaint noted that:

- None of the Service’s technologies were trained on a thorough and current understanding of federal and state laws.

- DoNotPay employees did not assess the quality or accuracy of the legal documents and advice produced by the majority of the service’s law-related features.

- The company has not employed or retained qualified attorneys to evaluate the service’s offerings.

The complaint also alleged that DoNotPay misled consumers about its AI service, suggesting they could file assault lawsuits without hiring a lawyer, and claimed it could identify legal violations on small business websites using just a consumer's email address. DoNotPay asserted this approach could save businesses $125,000 in legal fees, yet the FTC challenged the effectiveness of the service.

As part of the settlement, DoNotPay will notify consumers who subscribed between 2021 and 2023 about the limitations of its law-related services and will no longer be able to assert that it can replace professional services without empirical evidence.

The FTC is also targeting other companies, including the AI writing assistant service Rytr. The FTC claims Rytr facilitates the creation of fake reviews, coinciding with a recent rule that bans all companies from generating or selling fake reviews, including those produced by AI. Companies found violating this rule could face fines up to $51,744 per infraction.

Furthermore, the FTC has filed a lawsuit against Ascend Ecom for allegedly defrauding consumers of at least $25 million. Ascend promised users that its AI-powered tools would enable them to launch online stores on platforms like Amazon, resulting in significant monthly income.

“Using AI tools to trick, mislead, or defraud people is illegal,” stated FTC Chair Lina M. Khan. “The FTC’s enforcement actions make it clear that there is no AI exemption from existing laws. By cracking down on unfair or deceptive practices, we are protecting consumers and ensuring that honest businesses can thrive.”