FTC Warns AI Companies Against Exploiting Data: Strict Enforcement of Terms of Service

The Federal Trade Commission (FTC) issued a stern warning on Tuesday to artificial intelligence firms and other companies regarding their terms of service and data practices. In a blog post, the FTC emphasized the importance of upholding user privacy commitments and vowed to crack down on companies that exploit data to enhance their AI tools.

Describing data as the “new oil,” the FTC highlighted the significant amounts of data collected by businesses, particularly AI companies, which have a constant need for more data. The blog post raised concerns about companies mining their user base for existing data to feed AI models, despite having privacy and security policies in place prohibiting such practices.

The FTC pointed out the potential conflict of interest faced by companies, noting the strong business incentives to use existing user data to improve AI products. The agency warned that any company that goes back on its privacy commitments risks facing legal consequences.

Specifically, the FTC stated that it will pursue cases against companies that adopt more permissive data practices, such as sharing consumer data with third parties or using it for AI training without properly informing consumers through changes to their terms of service or privacy policies. The agency cited previous cases where companies were charged for changing privacy policies without consumer consent.

In one example, the FTC alleged that the genetic testing company 1Health violated the law by expanding the types of third parties with which it shared consumer data without obtaining consent. The company settled with the FTC and agreed to dispose of consumer DNA samples stored for more than 180 days.

The FTC emphasized its commitment to taking action against companies engaging in unfair or deceptive practices, particularly those that try to alter privacy policies or terms of service without consumer knowledge. The agency concluded by stating that obtaining artificial consent is not intelligent and that companies must adhere to their privacy commitments.

Overall, the FTC’s warning serves as a reminder to companies to prioritize user privacy and transparency in their data practices, especially in the rapidly evolving field of artificial intelligence.