Before choosing AI tools for a business, the most checkable evidence is what the Federal Trade Commission (FTC) has found false about AI sales claims. On September 25, 2024, the agency announced Operation AI Comply, a set of actions against companies that used AI as a selling point, including a "robot lawyer" service and several e-commerce schemes that promised income from AI-powered stores. The FTC's position, stated by then-Chair Lina Khan, was that there is no AI exemption from existing laws.
Key takeaways
- Operation AI Comply, announced September 25, 2024, covered DoNotPay, Ascend Ecom, Ecommerce Empire Builders, Rytr, and FBA Machine.
- The FTC alleged that the e-commerce schemes caused consumer losses of at least USD 25 million (Ascend Ecom) and more than USD 15.9 million (FBA Machine).
- DoNotPay's final order, dated February 11, 2025, requires USD 193,000 in monetary relief.
- The Rytr order was set aside on December 22, 2025, which shows that these outcomes can change.
What the FTC announced on September 25, 2024
The announcement described five matters. The FTC alleged that DoNotPay promoted itself as "the world's first robot lawyer" without testing whether its output matched a human lawyer's and without retaining attorneys. The proposed settlement required a payment of USD 193,000, notices to subscribers from 2021 through 2023, and a ban on claiming the service substitutes for professional services without evidence.
Three actions concerned business opportunities. Ascend Ecom allegedly promoted AI-powered tools for earning passive income through online stores, charged tens of thousands of dollars in setup and inventory fees, and left consumers with losses the FTC put at no less than USD 25 million. Ecommerce Empire Builders allegedly advertised an "AI-powered Ecommerce Empire" with monthly income claims of USD 10,000 and had no evidence for them. FBA Machine, formerly Passive Scaling, allegedly promised guaranteed income from software described as AI-powered and caused more than USD 15.9 million in losses. In each of the three, a federal court had temporarily halted the operation and appointed a receiver at the time of the announcement.
The fifth matter: a tool that made fake reviews
Rytr, an AI writing assistant, was charged for a different reason. The FTC alleged that a "Testimonial and Review" feature let paid subscribers generate unlimited detailed reviews from minimal input, and that many reviews contained false details. The proposed order would have barred the company from selling any service designed to generate consumer reviews or testimonials. The Commission voted 3-2 on that matter, with two commissioners dissenting.
That order did not last. On December 22, 2025, the FTC reopened and set aside the final order by a 2-0 vote, saying the complaint's facts did not support the claim that Rytr had violated Section 5 of the FTC Act and that the order burdened an early-stage industry. The reversal was made in response to the administration's AI executive order and AI Action Plan. A business reading enforcement history should therefore treat each outcome as dated.
Reading the cases as a buying filter
The table maps each pattern from the announcement to a question a buyer can ask of any AI product. The questions are illustrative and do not come from the FTC.
| Pattern alleged | Matter | Question for a buyer |
|---|---|---|
| AI output said to equal a professional's | DoNotPay | What testing shows the output matches a qualified person, and who tested it? |
| Income promised from AI-powered stores | Ascend Ecom, Ecommerce Empire Builders, FBA Machine | Is there independent evidence of typical customer results, not testimonials? |
| A feature that mass-produces content with invented details | Rytr | Could the tool create text that misleads others, such as reviews? |
| Refunds or buybacks guaranteed but hard to obtain | Ascend Ecom, FBA Machine | Are refund terms written, and do they match what sales staff say? |
What the cases do not show
None of the five matters says that AI tools in general fail to work. They concern what sellers told customers. Several allegations also remain allegations: the announcement describes complaints and proposed orders, and later outcomes for Ascend Ecom, Ecommerce Empire Builders, and FBA Machine were not confirmed for this article. The DoNotPay order was finalized, according to the FTC's February 11, 2025 notice, after the Commission voted 5-0 on January 16, 2025.
The cases are U.S. enforcement. Canadian businesses face their own advertising and consumer rules, which were not reviewed here. This article is general information, not legal advice.
FAQ
What was Operation AI Comply?
It was an FTC announcement on September 25, 2024 of enforcement actions against companies accused of deceptive claims involving AI, including a legal-services chatbot and income schemes.
Did the FTC say AI tools are illegal?
No. The matters concerned allegedly false claims and unfair practices. The FTC's stated view was that existing laws apply to AI claims like any others.
How much did DoNotPay have to pay?
USD 193,000 in monetary relief under the final order announced February 11, 2025, plus notices to former subscribers and limits on unsupported claims.
Is the Rytr order still in force?
No. The FTC set it aside on December 22, 2025.
Related reading
- Cost savings from AI in business
- AI tools used across industries
- Components of an AI system
- Predictive analytics with AI
More in AI Tools and Industry.
Last verified: October 2026
Sources
- FTC Announces Crackdown on Deceptive AI Claims and Schemes, Federal Trade Commission, September 25, 2024
- FTC Finalizes Order with DoNotPay That Prohibits Deceptive "AI Lawyer" Claims, Federal Trade Commission, February 11, 2025
- FTC Reopens and Sets Aside Rytr Final Order in Response to the Trump Administration's AI Action Plan, Federal Trade Commission, December 22, 2025