DoNotPay's 'Robot Lawyer' Faces $193,000 FTC Fine for Deceptive Practices

DoNotPay 'robot lawyer' fined $193K by the FTC for not being a lawyer

The Federal Trade Commission is taking against DoNotPay, alleging that the AI-powered company billing itself as "the world's first robot lawyer" failed to back its claims that it could replace human legal representation. The agency's argues that DoNotPay did not conduct tests to assess whether its AI chatbot was equivalent to a human lawyer, and that the company did not hire or retain any attorneys of its own. DoNotPay has agreed to a proposed settlement that would see it face fines of $193,000. In addition, the settlement will require DoNotPay to inform customers who subscribed to its service between 2021 and 2023 about the limitations of its offerings. This proposed settlement is part of an FTC program called Operation AI Comply, which is targeting businesses that leverage artificial intelligence to make deceptive claims. "Using AI tools to trick, mislead, or defraud people is illegal," FTC Chair Lina M. Khan said. "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." In addition to promising legal services, DoNotPay also claimed it could get accounts . The company its first attempt to use its AI chatbot in a court setting in 2023 after multiple state bar associations intervened in the case.

DoNotPay Has to Pay Up Over 'World's First Robot Lawyer'

The company never tested the accuracy of its AI lawyer with a real human lawyer, according to the FTC. DoNotPay, the AI company best known for helping users cancel unwanted subscriptions and fight parking tickets, has reached a settlement with the FTC over an AI chatbot that was advertised as "the world's first robot lawyer." The AI lawyer didn't live up to its claims and DoNotPay never properly tested the chatbot tool, according to the FTC. In fact, the company reportedly never even hired a real human lawyer to work on the product. DoNotPay has agreed to pay $193,000 and will be required to send a notice to any previous customers who used the AI lawyer from 2021 to 2023 warning about the limitations of the subscription service. The settlement will also "prohibit the company from making claims about its ability to substitute for any professional service without evidence to back it up," according to a statement Wednesday from the FTC. The AI lawyer billed itself as a tool that could be used for things like suing for assault in small claims court and drafting a cease and desist letter. The AI tool also created legal documents like NDAs, business contracts, prenuptial agreements, and custody agreements, according to the FTC. DoNotPay had initially planned to use its AI lawyer in a physical courtroom but shut down that plan in early 2023 after receiving threats from State Bar associations. The FTC complaint, which is available to read online, is filled with some rather odd details, including a quote that appeared on the DoNotPay website that purported to be from the Los Angeles Times: “What this robot lawyer can do is astonishingly similarâ€"if not moreâ€"to what human lawyers do.†In reality, the quote was from the Los Angeles Times High School Insider website, a user-generated content platform for high school students, according to the FTC. The tool also wasn't tested in a way that any reasonable person might expect, according to the FTC complaint: DoNotPay employees have not tested the quality and accuracy of the legal documents and advice generated by most of the Service’s law-related features. DoNotPay has not employed attorneys and has not retained attorneys, let alone attorneys with the relevant legal expertise, to test the quality and accuracy of the Service’s law-related features. The founder of the AI company, Joshua Browder, has previously said DoNotPay wants to, “replace the $200-billion-dollar legal industry with artificial intelligence." Browder dropped out of college in 2018 as part of the Thiel Fellowship, a program started by tech investor Peter Thiel that gives people money to drop out of college and start a business. For its part, DoNotPay was quick to note the company has not admitted any liability in the settlement with the FTC. “Using AI tools to trick, mislead, or defraud people is illegal,†Khan said in a statement posted to the agency's website. “The FTC’s enforcement actions make clear that there is no AI exemption from the laws on the books," Khan continued. "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.â€

Startup behind "world's first robot lawyer" to pay $193K for false ads, FTC says

You can't "sue anyone with a click of a button" without testing it first, FTC says. Among the first AI companies that the Federal Trade Commission has exposed as deceiving consumers is DoNotPay -- which initially was advertised as "the world's first robot lawyer" with the ability to "sue anyone with the click of a button." On Wednesday, the FTC announced that it took action to stop DoNotPay from making bogus claims after learning that the AI startup conducted no testing "to determine whether its AI chatbot's output was equal to the level of a human lawyer." DoNotPay also did not "hire or retain any attorneys" to help verify AI outputs or validate DoNotPay's legal claims. DoNotPay accepted no liability. But to settle the charges that DoNotPay violated the FTC Act, the AI startup agreed to pay $193,000, if the FTC's consent agreement is confirmed following a 30-day public comment period. Additionally, DoNotPay agreed to warn "consumers who subscribed to the service between 2021 and 2023" about the "limitations of law-related features on the service," the FTC said. Moving forward, DoNotPay would also be prohibited under the settlement from making baseless claims that any of its features can be substituted for any professional service. A DoNotPay spokesperson told Ars that the company "is pleased to have worked constructively with the FTC to settle this case and fully resolve these issues, without admitting liability." "The complaint relates to the usage of a few hundred customers some years ago (out of millions of people), with services that have long been discontinued," DoNotPay's spokesperson said. The FTC's settlement with DoNotPay is part of a larger agency effort to crack down on deceptive AI claims. Four other AI companies were hit with enforcement actions Wednesday, the FTC said, and FTC Chair Lina Khan confirmed that the agency's so-called "Operation AI Comply" will continue monitoring companies' attempts to "lure consumers into bogus schemes" or use AI tools to "turbocharge deception." "Using AI tools to trick, mislead, or defraud people is illegal," Khan said. "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." DoNotPay never tested robot lawyer DoNotPay was initially released in 2015 as a free way to contest parking tickets. Soon after, it quickly expanded its services to supposedly cover 200 areas of law -- aiding with everything from breach of contract claims to restraining orders to insurance claims and divorce settlements. As DoNotPay's legal services expanded, the company defended its innovative approach to replacing lawyers while acknowledging that it was on seemingly shaky grounds. In 2018, DoNotPay CEO Joshua Browder confirmed to the ABA Journal that the legal services were provided with "no lawyer oversight." But he said that he was only "a bit worried" about threats to sue DoNotPay for unlicensed practice of law. Because DoNotPay was free, he expected he could avoid some legal challenges. According to the FTC complaint, DoNotPay began charging subscribers $36 every two months in 2019 while making several false claims in ads to apparently drive up subscriptions.

An AI service promised 'the world's first robot lawyer.' The FTC says it was a scam

The company offered a service that was supposedly "the world's first robot lawyer," claiming to sue anyone with a press of a button. On its website, DoNotPay said it would give "power to people" against big corporations by "using AI to charge fees, collect debts and spam consumers." But now, the company itself faces scrutiny after the FTC alleged that DoNotPay failed to keep up with its promises. The services offered by the company included everything from using a virtual card for free trials to filing a complaint against any company. According to the FTC, DoNotPay claimed its users could even "sue for assault without a lawyer" and "generate perfectly valid legal documents in no time." It also made claims of replacing "the $200-billion-dollar legal industry with artificial intelligence." According to the FTC's complaint, DoNotPay never tested whether its law-related features operated like a human lawyer, and subscribers who used the law-related features complained that they were not asked to submit information relevant to their claims, according to the accusations. FTC said, "DoNotPay employees have not tested the quality and accuracy of the legal documents and advice generated by most of the Service's law-related features. DoNotPay has not employed attorneys and has not retained attorneys, let alone attorneys with the relevant legal expertise, to test the quality and accuracy of the Service's law-related features." "Using AI tools to trick, mislead, or defraud people is illegal," said FTC Chair Lina Khan in a press release. "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." DoNotPay has agreed to the Commission's order. The settlement includes payment of $193,000 and a notice issued to subscribers between 2021 and 2023, warning them about the limitations of law-related features. In addition, the order prohibits the company from making any false claims of substituting professional service without any evidence. Additionally, the FTC filed lawsuits against four other companies, including Ascend Ecom, an online business that allegedly falsely claimed its "cutting AI technology" would help consumers earn passive income of thousands of dollars per month. Other companies facing FTC scrutiny are Ecommerce Empire Builders, Rytr, and FBA Machine.

'Robot lawyer' company faces $193,000 fine as part of FTC's AI crackdown

The FTC says that DoNotPay has agree to pay $193,000 to settle the charges against it and to warn consumers who subscribed between 2021 and 2023 about the limitations of its law-related offerings. DoNotPay will also not be allowed to claim it can replace any professional service without providing evidence. The FTC also announced action against other companies that have used AI services to mislead customers. That includes AI "writing assistant" service Rytr, a company the FTC says provides subscribers with tools to create AI-generated fake reviews. The move against Rytr comes a little over a month after the FTC Federal Trade Commission announced a final rule banning all companies from creating or selling fake reviews, including AI-generated ones. It will soon go into effect, which means the FTC can can seek a maximum of up to $51,744 per violation against companies.

Shocker: A Robot Lawyer Chatbot Isn't as Good as the Real Thing

The Federal Trade Commission is cracking down on companies, including DoNotPay, that sell AI-powered services that fail to meet expectations. The FTC is taking action against five companies accused of exploiting the AI trend to "supercharge" their deceptive or unfair trade practices, harming consumers in the process. "The cases included in this sweep show that firms have seized on the hype surrounding AI and are using it to lure consumers into bogus schemes," the US regulator adds. As part of the crackdown, the FTC is going after UK-based DoNotPay, which has offered a robot lawyer chatbot since 2015 to help users fight parking fines and other fees from corporations and governments. The problem is that DoNotPay's marketing overpromised when claiming its service "could substitute for the expertise of a human lawyer." "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 FTC claims. The agency's complaint also alleges that a DoNotPay service promising to check small business websites for federal and state violations based on user email addresses failed to deliver. DoNotPay tells PCMag it's "pleased" to have worked with the FTC on a settlement without admitting liability. This means DoNotPay will, ironically, need to pay $193,000 and send a notice to affected consumers about the limitations of its robot lawyer services. A DoNotPay spokesperson adds: "The complaint relates to the usage of a few hundred customers some years ago (out of millions of people), with services that have long been discontinued. DoNotPay retained Maneesha Mithal, former Associate Director at the FTC, as outside counsel, who has been incredibly helpful in handling this matter." The FTC's crackdown also targeted Ascend Ecom for selling AI tools that promised to help consumers earn "thousands of dollars a month in passive income by opening online storefronts." In reality, the promised gains failed to materialize. Although the FTC's case is still proceeding against Ascend Ecom, the regulator noted: "a federal court issued an order temporarily halting the scheme and putting it under the control of a receiver." The FTC secured a similar court order against Ecommerce Empire Builders, which also focused on selling AI tools to help users build online storefronts, claiming they could rake in millions through the business opportunity. "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," the commission said. "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." Another offender is Rytr, which markets its AI writing assistant as a way to generate ultimately fake product reviews -- a practice the commission is also targeting. The investigation led the FTC to reach a settlement with Rytr, barring it from advertising, promoting, or selling any services meant to generate consumer reviews or testimonials. The fifth company, FBA Machine, allegedly cost consumers $15.9 million by also promising income via AI-generated storefronts. The FTC halted the scheme with a temporary court order. As part of Wednesday's announcement, the commission also urges the public to question unsubstantiated AI marketing hype. "AI tools can be a good starting point, but be skeptical of claims that they can fully replace a professional," the FTC says in a separate post.

"Robot lawyer" a scam, FTC says in major AI crackdown

AI scams tricked people into losing a lot of money, according to the FTC. Credit: Tero Vesalainen / iStock / Getty Images Plus The Federal Trade Commission announced Tuesday a new law enforcement effort called Operation AI Comply. As part of the sweep, it took action against multiple companies that used artificial intelligence to "supercharge" deceptive products and services. The cases involved AI-generated fake reviews, "the world's first robot lawyer," and online storefront schemes. The FTC said in a statement that consumers lost tens of millions of dollars, lured by the promise that AI-enabled problem-solving and automation would save them time, money, and, in the e-commerce cases, lead to increased earnings. Ultimately, the companies didn't deliver on their claims, and knew they were deceiving customers. "Using AI tools to trick, mislead, or defraud people is illegal," said Lina M. Khan, the agency's chair. "The FTC's enforcement actions make clear that there is no AI exemption from the laws on the books." The FTC's complaint against Rytr, the company that offered the AI writing service, describes how subscribers could generate effectively fake reviews that had no basis in their user's input. The FTC said that, in many cases, the AI-generated reviews included false information that would deceive consumers interested in purchasing a certain product. Some of Rytr's subscribers created thousands of reviews that potentially featured inaccuracies. The FTC argued that Rytr offered a service capable of disseminating a "glut of fake reviews that would harm both consumers and honest competitors." The FTC has proposed barring Rytr from advertising, promoting, marketing, or selling a service related to generating consumer reviews or testimonials in the future. The agency banned AI-generated and fake reviews in August. As part of Operation AI Comply, the FTC took action against DoNotPay, a company that told consumers its AI robot could help them "sue for assault without a lawyer" and "generate perfectly valid legal documents in no time." While the company billed the service as "the world's first robot lawyer," it didn't conduct testing to compare its AI chatbot to a human lawyer. Nor did it have attorneys on staff. Instead, the company told customers that it could check a small business's website for violations of federal and state law, a feature that was not effective. The FTC also filed complaints against three companies that preyed on people looking to open online storefronts, including on TikTok, Walmart, Amazon, and Etsy. These business typically charged a significant fee to start an online store powered by proprietary software and AI that could boost their earnings. Some customers were required to purchase inventory that didn't sell. One company, FBA Machine, promised customers they could operate a "7-figure business" that would be "risk-free." It falsely guaranteed refunds to customers who fell short of recouping their initial investment, which the FTC said ranged from tens of thousands to hundreds of thousands of dollars. In total, customers lost nearly $16 million to the scheme. Another company, Ascend Ecom, told customers that they could start stores that would eventually produce a five-figure monthly income, thanks to its "cutting edge" AI tools. The FTC estimated that the scheme defrauded customers of at least $25 million.