FTC Warns AI Technology Like ChatGPT Could "Turbocharge" Fraud

In a audience Held on Capitol Hill and focused on the Federal Trade Commission's work to protect American consumers from fraud and other deceptive practices, FTC Chairman Lina khan, and other commissioners warned the representatives of the House of potential of modern AI technologies, like ChatGPT, to be used to "turbocharge" fraud. The warning came in response to a question about how the Commission was working to protect Americans from unfair practices related to technological advances.

Khan responded by agreeing that AI presents new risks that the FTC must manage, despite the other benefits it may present.

"AI presents a whole set of opportunities, but it also presents a whole set of risks"Khan told House representatives. “And I think we've already seen ways that it could be used to turbocharge fraud and scams. We have been putting market participants on notice that cases where AI tools are effectively designed to deceive people can put them in the crosshairs of FTC action,” he stated.

Khan further cautioned that the ability of AI to turbocharge fraud should be considered a "serious concern."

To help combat the problem, the FTC chairperson noted that her technologists were being integrated into the agency's work, both on the consumer protection and competition sides, to ensure that any issues with AI were properly identified and managed.

Rebecca Slaughter, commissioner of the FTC, played down Khan's remarks, explaining that the FTC has adapted to new technologies over the years and has the experience to adapt again to the fight against AI-driven fraud.

"There's a lot of noise around AI right now and it's important because it's [a] revolutionary technology in some ways"said Slaughter. “But our obligation is to do what we have always done, which is apply the tools we have to these changing technologies, make sure we have the experience to do it effectively, but not be scared off by the idea that this is revolutionary new technology, and dedicate ourselves fully to protecting people,” he said.

The Commission's testimony, delivered by Khan, Slaughter and Commissioner Álvaro Bedoya, was presented before the House Energy and Commerce Subcommittee on Innovation, Data and Commerce, and touched on a wide range of topics beyond AI.

Among those who crossed paths with the technology, agency representatives detailed in their written testimony the FTC's work to reduce the scourge of spam phone calls; your warning to the Opendoor online homebuyer regarding your misleading claims about potential sales prices; misleading claims made by members of the cryptocurrency community; its work to protect consumers' private health data collected by websites and apps; its handling of COPPA (Children's Privacy Act) violations by Epic Games, maker of Fortnite; your orders to the Chegg online learning platform for failing to protect personal data; his fight against junk fees and the inability for consumers to easily cancel subscriptions; deceptive practices in the gig economy; and much more.

The agency also noted that it launched a new Technology Office (OT) in February with the goal of supporting the agency's policy and law enforcement work by offering in-house technical expertise, which could help it keep up with changing technology. The FTC's testimony specifically referred to OT's focus on areas such as security and privacy, digital marketplaces, augmented and virtual reality, the gig economy, and ad-tracking technologies, in addition to "automated decision making," or what AI might include.

"The creation of the Office of Technology builds on the FTC's efforts over the years to broaden its internal technology expertise, and brings the agency in line with other leading antitrust and consumer protection agencies around the world," the FTC said.