Why not everyone is on board with a government crackdown on deceptive online AI products

• The FTC is targeting companies that use AI tools or make claims about AI for deceptive practices.
• The crackdown includes firms that sell AI tools for fake reviews or misleading services.
• But some experts worry the crackdown could stifle innovation.

The Federal Trade Commission is cracking down on companies selling AI tools that it says harm consumers. But some experts, and even some FTC commissioners, worry the agency could do more harm than good.

The FTC said last week it had targeted five companies that used artificial intelligence "to supercharge deceptive or unfair conduct that harms consumers."

One company claimed to sell AI "lawyer" services, and multiple companies deceptively claimed to sell AI tools to help build online stores. Another company, Rytr, has offered an AI writing assistant since 2021. The FTC says the tool offers a feature that generates fake testimonials and reviews.

The FTC said in court documents that Rytr's service can quickly generate an unlimited number of "genuine-sounding reviews" with minimal input from the user. The complaint says the tool's "likely only use" is to post fake reviews that deceive consumers and "pollute the marketplace with a glut of fake reviews."

In August, the FTC announced it would seek more civil penalties against companies that use fake reviews to boost products or website traffic and strengthen regulations around similar practices.

"Consumers rely on reviews for fair and accurate information about products and services, and fake reviews can give consumers a false impression of a product or service's quality," the complaint says.

As annoying as fake reviews can be, not everyone is on board with the FTC crackdown.

Neil Chilson, the head of AI policy at Abundance Institute, a tech nonprofit, and a former acting chief technologist at the FTC, told Bloomberg that the action against Rytr is an "extremely aggressive" use of authority for the agency.

"It worries me about the effect it would have," Chilson told the outlet. "The legal uncertainty of, 'If someone does something bad with my product, is the FTC going to sue me?'"

Commission members voted 3 to 2 on party lines to approve the action against the companies, with two Republican commissioners dissenting.

In her dissent, Republican commissioner Melissa Holyoak wrote that misguided enforcement can stifle innovation and competition in all industries, "especially evolving ones like artificial intelligence."