The settlement followed the FTC’s August complaint that alleged that Air AI, five related companies, and owners Caleb Maddix, Ryan O’Donnell and Thomas Lancer made deceptive claims about business growth, earnings potential and refund guarantees while selling artificial intelligence (AI)-related tools, the agency said in a Tuesday (March 24) press release.
The proposed order against Air AI also includes an $18 million monetary judgment that will be largely suspended due to the inability of the company and operators to pay the full amount, according to the release. The operators are required to pay $50,000 to the FTC for consumer relief, per the release.
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Air AI did not immediately reply to PYMNTS’ request for comment. The company’s website was down at the time of publication.
According to the FTC’s press release, the complaint alleged that the company and its owners made false claims or misrepresentations about the likelihood that people who purchased their services would make substantial earnings, a refund or buy-back guarantee, and the performance of their services. It also alleged that they failed to provide consumers with required disclosure documents.
The regulator’s complaint alleged that with these actions, the company and operators violated the Telemarketing Sales Rule and the Business Opportunity Rule, per the release.
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The proposed order is subject to a court’s approval, the release said.
When announcing in August that it sued Air AI, the FTC alleged that the company advertised a conversational AI product that could replace human customer service representatives and, in combination with other services, make business owners millions of dollars. It also alleged that business owners who joined up with Air AI lost as much as $250,000.
“Companies that market AI-related tools with false promises of unrealistic investment returns and guaranteed refunds harm hardworking small business owners and undermine legitimate business’s adoption of AI,” Christopher Mufarrige, director of the FTC Bureau of Consumer Protection, said in the August press release. “The FTC is focused on ensuring the promise of new technology isn’t misused as a means to mislead consumers.”
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