FTC Approves Final Order Against Seller of AI “Testimonial & Review” Service for Allegedly Providing Subscribers with Means to Generate Deceptive Reviews

The FTC’s September 2024 complaint alleges that the service generated detailed reviews that contained specific, often material details that had no relation to the user’s input, so would purportedly be false for the users who copied them and published them online.  Accordingly, the complaint charges that the company violated the FTC Act by providing subscribers with the means to generate false and deceptive written content for reviews.  It also alleges the company engaged in an unfair business practice by offering a service that is likely to pollute the marketplace with a glut of fake reviews.

The final order settling the Commission’s complaint prohibits the comapny from engaging in such conduct and bars the company from advertising, promoting, marketing or selling any service dedicated to – or promoted as – generating consumer reviews or testimonials.

The Commission voted 3-2 to approve the final consent order and letters to eight public commenters.  Commissioners Melissa Holyoak and Andrew Ferguson previously issued separate dissenting statements.

In his dissent, Commissioner Ferguson states, in pertinent part, “I dissent from the filing of the complaint and consent agreement because I do not have reason to believe that [the company] violated Section 5, and because I do not believe filing is in the public interest.  The Commission’s theory is that Section 5 prohibits products and services that could be used to facilitate deception or unfairness because such products and services are the means and instrumentalities of deception and unfairness.  Treating as categorically illegal a generative AI tool merely because of the possibility that someone might use it for fraud is inconsistent with our precedents and common sense.  And it threatens to turn honest innovators into lawbreakers and risks strangling a potentially revolutionary technology in its cradle.”  Commissioner Ferguseon goes on to state that “[t]he Complaint does not identify a single [company]-generated review published anywhere by anyone, much less a false review that violates Section 5.  It nevertheless concludes that [the company] ‘has furnished its users and subscribers with the means to generate written content for consumer reviews that is false and deceptive.’  The Commission does not allege that [the company] made a misleading statement or omission of any kind, much less one that was material or likely to mislead consumers.  The Commission instead pleads that [the company] furnished the “means and instrumentalities” by which someone else could make false statements in violation of Section 5 … The Commission does not accuse [the company] of making any statements, much less false statements.  Nor is [the company’s tool necessarily deceptive like mislabeled art, or useful only in facilitating someone else’s Section 5 violation … [a] consumer could use it to draft an honest and accurate review … [t]he ommission’s complaint is a dramatic extension of means-and-instrumentalities liability … [t]he Commission treats [the] company’s sale of a product with lawful and unlawful potential uses as a categorical Section 5 violation because someone could use it to write a statement that could violate Section 5 … [t]his theory is incorrect.  Section 5 does not categorically prohibit a product or service merely because someone might use it to deceive someone else.  Interpreting Section 5 to prohibit products and services with conceivable illegal uses would prohibit an infinite variety of innocent and productive conduct …”

Richard B. Newman is an FTC defense lawyer at Hinch Newman LLP.  Follow FTC defense lawyer on National Law Review.