As the buzzy tech grows in popularity, concerns regarding consumer protection, privacy, and ethics could prompt advertisers to take pause. The following is a guest piece by John Villafranco, a partner with Kelley Drye who provides litigation and counseling services to household brands and Fortune 500 companies with a focus on advertising law and consumer protection. Opinions are the author’s own. As artificial intelligence (AI) technology develops rapidly, the law works to keep pace in order to mitigate the risks of increasingly powerful models. Corporations using AI are quickly realizing the many opportunities afforded by the technology, but are also learning of the associated legal concerns in such areas as consumer protection, privacy and ethics. For example, ChatGPT and other Large Language Models (LLMs) may generate outputs that are false, misleading, biased, illegal or inaccurate, and it may be difficult to trace the source of the error or hold anyone responsible for the consequences. These issues require regulatory intervention — a fact acknowledged even by Sam Altman, OpenAI’s chief executive. And any such intervention will create risks and potential liability for advertisers and marketers while prioritizing safety. Federal Trade Commission guidance
The Federal Trade Commission has stated, where the conduct is commercial in nature, it considers regulation to be within its domain. Where that conduct causes harm to consumers, businesses should expect the FTC to act. This applies to AI as much as it does to any other form of traditional advertising and marketing. In recently released guidance, the FTC reminded users of AI that they should not engage in practices that do more harm than good and the technology should not be used to steer people unfairly or deceptively into harmful decisions. Areas of concern that were identified include finance, health, education, housing, and employment. The FTC guidance also noted that manipulation can be a deceptive or unfair practice under Section 5 of the FTC Act when generative AI output is driving a consumer to a particular website, service provider or product because of a commercial relationship. The guidance is consistent with the FTC’s recent focus on so-called “dark patterns” — sophisticated design practices or formats that manipulate or mislead consumers into taking actions they would not otherwise take.
How AI’s Legal Risks Are Challenging Marketers
