'Our AI Does Everything!' The Risks of Overstating the Use of Artificial Intelligence

Business litigation attorneys Craig Heeren, Pete Baldwin, Allyson Chavez, and Yusuf Qureshi co-authored an article for the New York Law Journal titled “'Our AI Does Everything!' The Risks of Overstating the Use of Artificial Intelligence.” 

The authors state that while artificial intelligence (AI) offers potential cost-savings and technological opportunities, several AI companies and their executives have been caught allegedly overpromising, or outright lying, about their technology’s capabilities. Called “AI washing,” this practice is likely to become a focus for enforcement agencies and regulators like the Federal Trade Commission (FTC) the authors note, because it includes a variety of additional risks, ranging from national security investigations to state regulator inquiries to potential class action claims.

“Much of the focus on “AI washing” has come from regulators like the [Securities and Exchange Commission] and FTC, who are concerned about the impact of misleading statements on investors and American consumers, with the DOJ bringing criminal fraud actions in the most egregious cases,” the authors note. “But the risk of enforcement from misleading claims about the use of AI technology—particularly where it involves an overstatement and not an out-and-out falsehood—is far more expansive and can arise in a variety of additional settings.”

The authors encourage companies to take precautionary steps to avoid enforcement liability, such as self-auditing practices, encouraging broad technological literacy, and identifying potential issues early.