FTC advises Congress about AI technology such as ChatGPT could be used to ‘turbocharge’ fraud and swindles

In a Congressional session on Tuesday, which focused on the work of the Federal Trade Commissioner to safeguard American consumers from deceitful methods, FTC Chair Lina Khan and her fellow commissioners advised House representatives about the possibility of advanced AI technologies, such as ChatGPT that could be employed for the purpose of “turbocharge” fraud. The warning was issued in response to an inquiry about the manner in which they could ensure that the Commission worked to safeguard Americans against unfair business practices relating to technological advancements.

Khan replied that he agreed that AI brought new challenges for the FTC to deal with regardless of any other benefits it could offer.

“AI presents a whole set of opportunities, but also presents a whole set of risks,” Khan stated to his House representatives. “And I’m sure we’ve observed ways AI could be used to boost fraud and swindles. We’ve put market participants on alert that situations, where AI tools are used to fool people, could put them in the crosshairs for FTC enforcement,” she stated.

Khan added that AI’s capacity to boost fraud is a “serious concern.”

To address the issue To combat the issue FTC Chair said the technology experts were integrated throughout the agency’s activities in both the protection of consumers and the competition side, in order to ensure that any issues involving AI will be recognized and addressed.

In a follow-up to the incident, FTC Director Rebecca Slaughter downplayed Khan’s remarks by stating that the FTC was able to adapt to the latest technologies over time and is able to continue to evolve to fight fraud based on AI.

“There’s a lot of noise around AI right now and it’s important because it is in revolutionary technology in some ways,” Slaughter explained. “But our obligation is to do what we’ve always done — which is apply the tools we have to these changing technologies, make sure that we have the expertise to do that effectively, but to not be scared off by the idea that this is a new revolutionary technology, and dig right in on protecting people,” she added.

The Commission testimony, which was delivered by Khan, Slaughter, and Commissioner Alvaro Bedoya, was presented before the House Energy and Commerce Subcommittee on Innovation, Data, and Commerce and discussed many different issues that go beyond AI.

In addition to those that interacted with technology, agency representatives described within the recorded statement the FTC’s efforts to limit the volume of phone calls that are spam as well as its warning to buyers of homes on the internet Opendoor about its false claims about the potential sale prices; deceitful claims made by people in the cryptocurrency community, its efforts to safeguard the privacy of consumers’ health data that is collected through apps and websites as well as its handling of COPPA (children’s privacy laws) violations committed by Fortnite’s maker Epic Games; its orders to online learning platform Chegg regarding its inability to safeguard personal information and its fight against excessive charges and the inability of customers to cancel subscriptions easily as well as deceitful practices within the gig economy, and much more.

The FTC also stated that it had launched an entirely brand new Office of Technology (OT) in February with the aim to support the agency’s policy and law enforcement work by supplying inside-house technical assistance, which can help keep up with the rapid advancements in technology. The FTC’s statement specifically alluded to the OT’s responsibilities in areas such as privacy and security digital markets as well as virtual and augmented reality and the gig economy and ad tracking technologies and “automated decision-making,” or the possibility of AI.

“The creation of the Office of Technology builds on the FTC’s efforts over the years to expand its in-house technological expertise, and it brings the agency in line with other leading antitrust and consumer protection enforcers around the world,” the FTC has said.

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