Well, it had to happen! Any time some people think they can make a quick buck, they will exploit their customers, partners, or supporters. Now, as it turns out, people are exploiting the AI hype and craziness to gain the upper hand without doing the work.
It’s called AI Washing, and the exploitation is that some companies are making claims that they are using AI in ways that they really aren’t. I shouldn’t be surprised that this is happening.
When companies exaggerate the extent of their AI usage in an effort to sell more, garner more attention, or even get more money from investors, that’s AI washing.
An article by Forbes reports on a study of 2,830 start-ups in Europe that classified themselves as AI companies. The study found that only 1,580 were, in reality, properly categorized as AI companies. The study also found that start-ups that were labeled as utilizing or developing AI attracted 15% - 50% more funding from investors than other technology companies.
AI washing has become so prevalent that it’s now captured the attention of the US Securities and Exchange Commission (SEC) and the Federal Trade Commission (FTC).
The FTC has publicly told companies to keep their AI claims in check. They will be looking for outlandish or false claims of using AI.
As for the SEC, they too have been stepping up penalties for people AI Washing. The SEC recently settled a case with two investment advisors who made false and misleading statements about how they used AI. As you can imagine, this type of falsehood could have devastating effects on many people.
Why Is AI Washing A Problem
At its core, AI washing is a deceptive business practice that harms people and companies. It harms people and companies that think they are buying one thing and getting something completely different. It also harms the entire industry. Once enough people are hurt by AI Washing; the entire market will become suspicious of every AI claim and begin to pull back on engaging with or purchasing products and/or services that genuinely use AI technologies.
What This Means For Brands
First, over-hyping your use of AI could land you square in the sights of the FTC, and nobody wants that kind of trouble. With oversight happening now at the federal level, how to market your use of AI should be carefully monitored to make sure that you’re not overstating how you’re using AI technology.
Secondly, be specific about what you are using in your claims of AI. What technology is being employed, and how are you using the technology. As an example, if you have a chatbot on your site that is simply using automated responses, that’s not AI.
