FTC warns Congress that AI technology like ChatGPT could ‘turbocharge’ fraud and scams

During a Tuesday congressional hearing on the Federal Trade Commission’s work to protect U.S. consumers from fraud and other deceptive practices, FTC Chair Lina Khan and her fellow commissioners warned representatives of the Chamber of the potential for modern AI technologies, like ChatGPT, to be used to “turbocharge” fraud. The warning was issued in response to an investigation into how the Commission was working to protect Americans from unfair practices related to technological advances.

Khan responded by agreeing that AI presented new risks for the FTC to manage, despite any other benefits it might present.

“AI presents a whole set of opportunities, but also presents a whole set of risks,” Khan told House officials. “And I think we’ve already seen how it could be used to accelerate fraud and scams. We have warned market participants that instances in which AI tools are actually designed to deceive people may expose them to FTC action,” she said.

Khan further warned that AI’s ability to speed up fraud should be considered a “serious concern”.

To help combat the problem, the FTC Chairman noted that his technologists were integrated into the agency’s work, both on the consumer protection side and on the competition side, to ensure that any issues related to the AI ​​would be correctly identified and treated.

In a follow-up, FTC Commissioner Rebecca Slaughter played down Khan’s remarks by explaining that the FTC had adapted to new technologies over the years and had the expertise to adapt again to combat the AI-powered fraud.

“There’s a lot of noise around AI right now and that’s important because it’s groundbreaking technology in some ways,” Slaughter said. “But our obligation is to do what we’ve always done – which is to apply the tools we have to these evolving technologies, to make sure we have the expertise to do it effectively, but not to be scared away by the idea that it’s a revolutionary new technology, and digging right into protecting people,” she said.

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

Among those who cross-checked the technology, agency officials detailed in their written testimony the FTC’s work to reduce the scourge of unwanted phone calls; his warning to online homebuyer Opendoor about his misleading claims about potential sale prices; misleading claims made by members of the crypto community; its work to protect consumers’ private health data collected by websites and apps; its handling of COPPA (Children’s Privacy Protection Act) violations by Fortnite maker Epic Games; its orders to the online learning platform Chegg for its failure to protect personal data; its fight against unwanted charges and the inability of consumers to easily cancel subscriptions; deceptive practices in the gig economy; and more.

The agency also noted that it launched a new Office of Technology (OT) in February with the aim of supporting the agency’s law enforcement and policy work by offering in-house technical expertise, which that could help it keep pace with technological change. The FTC’s testimony specifically referenced OT’s focus on areas such as security and privacy, digital marketplaces, augmented and virtual reality, gig economy, and technologies. ad tracking, in addition to “automated decision making”, or which may include AI.

“The creation of the Office of Technology builds on the FTC’s efforts over the years to expand its internal technology expertise, and it aligns the agency with other key antitrust and antitrust enforcement officials. consumer protection around the world,” the FTC said.