AI Washing: False AI Claims in Products

Companies may use “AI-powered” to describe a product, but the phrase alone does not tell a buyer what the system does or how well it works. AI washing describes claims that exaggerate or misrepresent a company’s AI use or capability. Ask what the product promises, what feature is said to use AI, and what evidence would show it performs as claimed? Ask for concrete details rather than relying on labels. Does the company explain the task the system performs, its limitations, and when a person reviews the output? Are accuracy or savings claims tied to a defined test, representative inputs, and a baseline? Can the company identify the model or process involved, and explain how the capability fits into the product? Lack of public technical detail may be a reason to ask questions, but does not by itself prove a claim is false. Use of a third-party model can still be a real AI feature; the issue is whether the overall claim is accurate and substantiated. Regulators have acted on particular statements. In 2024, the SEC announced settled charges against investment advisers Delphia and Global Predictions, saying they made false or misleading claims about their purported AI use. The SEC’s release describes the specific statements and outcomes; it should not be read as a finding about every company that markets AI. The FTC’s Operation AI Comply announcement described cases involving AI-related claims and alleged deceptive conduct, including DoNotPay’s claims about a “robot lawyer.” For pending matters, distinguish allegations from final findings or settlements. Consumers can save the exact ad or product page, compare claims with independent testing and official records, and ask the company for evidence. Investors should read filings and risk disclosures. A claim that matters financially, medically, or legally deserves extra scrutiny and qualified advice. Report suspected deception to regulators, but avoid publicly accusing a company based only on buzzwords or missing technical details.