U.S. FTC Launches Inquiry Into OpenAI's Compliance With Consumer Protection Laws

OpenAI, the renowned creator of ChatGPT, is facing an investigation by the U.S. Federal Trade Commission or FTC for potential violations of consumer protection laws, which allegedly put personal reputations and data at risk.

In a recent demand for information sent to OpenAI, the FTC has escalated regulatory scrutiny of the Microsoft-backed startup that revolutionized generative artificial intelligence, captivating consumers and businesses while eliciting concerns about potential risks.

The FTC, known for its role in safeguarding consumer interests, has issued a comprehensive 20-page demand seeking records related to OpenAI’s approach to addressing risks associated with its AI models. The agency aims to investigate whether the company engaged in unfair or deceptive practices that resulted in “reputational harm” to consumers. Of particular interest is OpenAI’s actions concerning the potential for its products to generate false, misleading, or disparaging statements about real individuals.

News of the FTC’s investigation comes as the competition to develop more advanced AI services accelerates, prompting a surge in regulatory scrutiny surrounding the technology and its potential to disrupt societal and business operations.

Within the United States, Senate Majority Leader Chuck Schumer has advocated for “comprehensive legislation” to advance AI and ensure the implementation of robust safeguards. Schumer has also planned a series of forums later this year to delve into the subject.

OpenAI has not been immune to regulatory challenges beyond U.S. borders either. In March, the company encountered obstacles in Italy when the regulator temporarily suspended ChatGPT over allegations of OpenAI’s violation of the European Union’s General Data Protection Regulation, an extensive privacy framework introduced in 2018. Following negotiations, OpenAI was able to reinstate ChatGPT after agreeing to implement age verification features and granting European users the ability to block their personal information from being used to train the AI model.

The investigation initiated by the FTC underscores the increasing scrutiny and potential legal consequences faced by OpenAI. As concerns persist regarding the implications of AI technology on individuals and society at large, the company’s compliance with consumer protection laws is now under the regulatory spotlight.

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