The FTC authorizes new powers of investigation and compliance for AI

  • The FTC is extending the use of civil investigative demands (CIDs) for AI
  • CIDs are used to enforce consumer protection and antitrust laws
  • This will subject AI companies to greater levels of scrutiny and monitoring
ai regulation

The Federal Trade Commission (FTC) has expanded its investigative powers over the AI industry.

At the core of the FTC’s expanded powers are civil investigative demands (CIDs).

CIDs are used to enforce consumer protection and antitrust laws. CIDs compel entities or individuals to provide information, documents, or testimony relevant to an investigation. Information can range from corporate records and emails to financial statements and other data pertinent to the agency’s inquiry.

The objective behind issuing a CID is to gather the necessary evidence to determine whether any laws have been breached, especially in cases of deceptive, fraudulent, or anti-competitive practices. As these demands carry legal weight, non-compliance can lead to legal consequences.

Samuel Levine, director of the Bureau of Consumer Protection at the FTC, emphasized CIDs’ legal force and the potential consequences for companies that fail to comply.

This aligns the FTC’s approach to AI with its regulatory practices in other industries, signaling that technology firms must diligently organize their AI-related records on product development, marketing claims, and third-party oversight.

FTC chair Lina Khan has established quite a fearsome reputation for the Commission’s incisive style under her leadership. 

Khan warned AI companies that enforcement agencies would use current laws to act against them if necessary, highlighting that they weren’t immune from the law just because generative AI was fresh and unregulated. 

And that’s not the only time she’s stated AI companies are under scrutiny. Speaking at Stanford, Khan said, “Much is uncertain about what the future of this technology will look like,” “But the FTC has made clear that there is no exemption from the [antitrust] laws on the books.” 

Accelerated investigations and data gathering

The FTC is extending its ability to gather factual information about AI’s impact on consumer protection and fair competition. 

Companies must maintain thorough documentation of their AI systems, including training data, validation studies, case studies, and monitoring reports.

The FTC is also ramping up its investigations into algorithmic fairness and bias, stating businesses must proactively address these issues throughout the AI product development lifecycle. 

Further, companies must ensure transparency and accountability in any third-party collaborations.

In addition to these regulatory developments, the FTC has launched initiatives like the Voice Cloning Challenge to protect users from fraud and privacy violations involving synthetic voices.

This marks a significant step in aligning technological advancement with responsible oversight, pushing the FTC’s agenda under Khan further into the generative AI industry.

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